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Hotels Quarterly UpdateQuarter 4, 2013 Market Perspectives and Commentaries - Hotel and Leisure Industry

RWH QLD UPDATE The Quality of a Pub Investment?

By Tony Bargwanna

Time to Invest in a Strengthening Market?

By Leon Alaban

The Small Bar Revolution

By Christian Tsalikis

Two New Properties Under Contract in

the NT

By Brenton McCarthy

Management Rights Ramping Up

By Grant Bailey

RWH NSW UPDATE With Andrew Jolliffe

and Blake Edwards

Highlights Welcome to the fourth issue of the Ray White Hotels (RWH) Australia newsletter.

Each quarter, interviews with Australia’s leading brokers, advisors, valuers and clients will provide you with their current perspectives on topical issues and the latest in market trends. This edition focuses on post-election confidence boost and the impacts on the property market.

Ray White Network is the largest residential based agency in Australasia with just under 1000 franchises and over 10,000 employees in 11 countries. They continue to expand throughout Australia, New Zealand, Asia and the Middle East.

Ray White Hotels Australia is a member of the Ray White Network and provides specialist sales expertise in Hotel Real Estate. Established in 2010, they have transacted over 75 properties, in excess of $800 million Hotel, Pub, Motel and Leisure assets.

Ray White Advisory is wholly owned by Ray White Real Estate Pty Limited and provides specialist Valuation, Strategic Consulting and Research services for Hotel and Leisure property. They offer professional market advice to investors, financers, owners and operators.

For further information pleasecontact:Brisbane officeLevel 7, 123 Eagle StreetBrisbane QLD 4000P: 61 07 3046 4300

Sydney officeLevel 17/135 King StreetSydney NSW 2000P: 61 02 8016 3810

www.raywhitehotels.com.au

The Quality of a Pub Investment?Tony Bargwanna, Managing Director RWH Australia, delves into and debates the pub sector’s investment performance and probes perceptions.

Sometimes we take it for granted that the national pub sector has always traded, no matter what the national economic environment was up to.

I’m lucky enough to talk on a daily basis with some of industry’s most proven and recognised people. Within some of these conversations we drill down on recent and possible future pro’s and con’s that our beloved industry deals with.

More recently the discussions have centred on the well-publicised pending floats of new and existing portfolios. There are no surprises to the industry-educated here. Maybe the odd question of why this hasn’t happened earlier.

The market leader in this space at present is no doubt ALE. This year ALE were named the Property Investment Research (PIR) “2013 AREIT of the Year”.

ALE (Australia Leisure and Entertainment) Property Group, is Australia’s largest listed freehold owner of pubs with around 90 pubs in their property portfolio. All pubs are leased to members of Australian Leisure and Hospitality Group Limited (ALH) for an average initial term of 17 years.

Property trusts continue to perform strongly, with the AREITs sector outperforming the ASX 200 index by around 3% so far this year (The S&P/ASX 200 AREIT index’s 5.7% total return (including dividends) compared to 3.8% return for the S&P/ASX 200 index). AREIT index’s average annualised total return at 12% over the last 3 years compared to 7% for the S&P/ASX 200.

Tony Bargwanna, Managing Director, RWH Australia

Ray White Hotels proudly sponsor the 2013 Churchie National Emerging Art PrizeRay White Hotels (RWH) were principal sponsors of this year’s Churchie National Emerging Art Prize.

The winner, Sydney artist, Amy Tam’s compelling video piece, “The Perfect Boy Myth”, chosen from 32 finalists, was awarded $15,000 in prize money.

With “the churchie’ attracting 586 entries in a field of almost 300 artists from across Australia, the standard of the finalists this year was very high overall. The artwork entered ranged from paintings and drawings, to textile work, photography, sculpture and video pieces.

“‘the churchie’ prize is now recognised as one of Australia’s most rewarding art awards”, Bargwanna said. “It provides such great opportunity for emerging artists and is developing such a terrific reputation. We are very proud to be involved with this esteemed art award”

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Activity in the HunterThe Hunter Valley is one of the largest regional markets in Australia.

It enjoys a multi-faceted and thriving economy driven by tourism, the wine industry, mining, live entertainment, horse breeding and agriculture. Newcastle, the commercial hub for the region, is the second most populated city in New South Wales accounting for approximately 308,000 of the region’s 620,000 residents.

In 1999, Newcastle experienced a setback with the closure of the BHP steel works after 84 years

in operation. After employing approximately 50,000 people for many decades, the regional economy was forced to diversify as a result of the closure.

The Newcastle and wider Hunter economy has strengthened over the past decade as a result of this diversification and unemployment is at 20 year lows. The Federal Government has shown its commitment to the region with the $1.5 billion infrastructure project, The Hunter Expressway.This 40 kilometre, 4 lane expressway will greatly reduce travel time to the lower and upper Hunter Valley from both Sydney and Newcastle.

With construction due for completion in late 2013, the Hunter Expressway will generate further growth in the area. Significant residential development projects in the Lower Hunter are already under construction with a view to profit from the burgeoning population. Likewise the entertainment, hospitality and leisure industry in the area are likely to benefit from an increase in visitor numbers to the area.

‘Market fundamentals, the diverse economy and projected growth makes Newcastle and the wider Hunter Region an appealing market to those looking to invest in quality hotel and accommodation assets’, believes Nick Maclean, Hotel Sales Executive, Ray White NSW whom specialises in this region.

The Lower Hunter Valleys wineries, golf courses, restaurants, various types of accommodation (from luxury boutique to budget accommodation) and its proximity to Sydney and Newcastle attract approximately 2.3 million tourists to the region annually.

Recent transactions successfully managed by Ray White Hotels include The Honeysuckle Hotel on Newcastle Wharf (sold July 2012) and a 33 Unit Accommodation Development in Pokolbin, in the Lower Hunter Valley’s wine region (sold April 2013).

Currently listed for sale exclusively with Ray White Hotels is The Australia Hotel and Motel, Cessnock. This hotel caters to tourists, transient workers and the growing local residential population.

The Australia is capitalising on the aforementioned market conditions and this is reflected in strong earninings, with an annual turnover of approximately $3.5 million and its multiple revenue streams of accommodation, bar sales, food and poker machines. The Australia Hotel and Motel presents a compelling opportunity for buyers seeking A-Grade hotel assets in this region.

Other recent transactions in the Lower Hunter Valley include the 17 room Peppers Convent which sold for $6 million (November, 2010) and the Crowne Plaza Hunter Valley for $45 million (September, 2012).

Nick Maclean

The Australia Hotel and Motel, Cessnock. Currently exclusively listed for sale with RWH

The Honeysuckle Hotel on Newcastle Harbour. Successfully sold by RWH in July 2012

THE HUNTER VALLEY IS ONE OF THE LARGEST REGIONAL MARKETS IN AUSTRALIA

33 Unit Accommodation Development in Pokolbin, Lower Hunter Valley Wine Country.Successfully sold by RWH April, 2013

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This performance can be attributed to three factors: property trusts were cheap 12 months ago, they continue to add value in 2013 plus the progressive interest rate cuts have helped to lift demand for investments promising predictable income.

Most investors would agree that the low interest rate environment is likely to continue for some years supporting the opinion that AREITs will remain in demand over the next 12months.

Not only does congratulations go out to ALE but can I say this is a huge win for our industry. They achieved this in front of the following investments; 360 Capital Industrial Fund, Abacus Property Group, Astro Japan Property Group, Australian Education Trust, Australian Social Infrastructure Fund, BWP Trust, CFS Retail Property Trust, Challenger Diversified Property Group, Charter Hall Group, Charter Hall Retail, Commonwealth Property Office Fund, Cromwell Property Group, DEXUS Property Group, Goodman Group, GPT Group, Investa Office Fund, Mirvac Group, Stockland, Westfield Group and Westfield Retail Trust.

This acknowledgement comes at a time when some non-industry

analysts have not been favourable when commentating on the sector. The debt providers also took a small vacation from our patch and some are finding it a little difficult to re-enter the race.

When we take into consideration the ALE fund performance, it’s no surprise savvy investors are following suit. In comparison to the benchmark S&P/ASX200 returning 13%, ALE has delivered a solid 18% so far this year. Since listing in 2003, ALE have provided a compound annual total return of 21.9% p.a.

Recently media have promoted the up and coming proposal floats of the 55 Coles freeholds owned by Redcape and the Riversdale Pub Group which is looking like a $350-$500m portfolio of quality hotel venues.

In summary, this activity can only be positive for our industry. Legislation across the board has reached a sensible medium thanks to our industry lobbyists working closely with government.

All in all, it’s a predictable growth period for pub investors. The last 12 months has proven to be very active in the transaction department with both institutional and private investors committing to buy.

Below is a list of venues sold in the last 12 months by our offices alone confirming the activity:

Queens Arms Hotel, New Farm QLD Cat & Fiddle Hotel, Balmain NSW Plumpton Hotel, Glendenning NSW

The Envy Hotel, Broadbeach QLD Crown & Anchor Inn, Eden NSW Airport Tavern, Jingili, Darwin NT

Hotel HQ & Homemaker HQ, Underwood QLD Garry Owen Hotel, Rozelle NSW Palmerston Tavern, Palmerston, Darwin NT

Waterloo Bay Hotel, Wynnum QLD Kirrawee Cellers, Kirrawee NSW Plantation Resort, Rainbow Beach QLD

Varsity Lakes Tavern, Burleigh Waters QLD Imperial Hotel, Mt Victoria NSW White Bull Tavern, Roma QLD

Helensvale Tavern, Helensvale QLD Berwick Springs Hotel, Berwick VIC Freemasons Hotel, Gympie QLD

Belrose Hotel, Belrose NSW Pakenham Inn, Pakenham VIC Eden By The Bay, Scarness QLD

Railz On Regent, Redfern NSW Shamrock Hotel, Toowoomba QLD Legion Cabs site, Surry Hills NSW

Phoenix Hotel, Gympie QLD Buranda Lodge Motel, Woolloongabba QLD Charging Cross Hotel, Charging Cross NSW

My Bar Rocky, Rockhampton QLD Sandringham Hotel, Newtown NSW Kay Bee Hotel, Surry Hills NSW

Greystanes Hotel, Greystanes NSW Pokolobin, Rothbury NSW Steelworks Hotel, Port Kembla NSW

Fortune Of War Hotel, The Rocks NSW Wirrina Caravan Park, Wirrina Cove SA Wirrina Resort, Wirrina Cove SA

Tall Timber Hotel, Ourimbah NSW Greenfield Hotel, Greenfield Park NSW Imperial Hotel, Murwillumbah, NSW

Citrus Motel, Griffith NSW Burleigh Point Apartments, Burleigh Heads QLD Boyne Tannum Caravan Park, Boyne Island, Gladstone QLD

Time to Invest in a Strengthening Market? Key market indicators are poised making it the perfect time to procure pubs & taverns.

Leon Alaban, Director of Investment Sales RWH Australia believes now is the time to act as the market presents the perfect economic recipe to purchase. “The prime economic cocktail, of one part improved business confidence post-election, one part historically low interest

rates, one part higher yielding returns “, he says “along with a dash of genuine vendors meeting the market and a growing demand for pub product – it’s a faultless recipe for those vendors wanting to buy”.

Market fundamentals suggest that Australia’s property market is on the rebound; however, recovery will be slow and gradual.

“The market is changing,” Alaban agrees “RWH believe the pub market is in the early stages of a multi-year cyclical upswing thanks to the three key ingredients of business confidence, low interest rates and high yielding returns. All this, along with genuine vendors and a resurgence in demand for pubs, is making investments more attractive and viable”.

Post-election optimism elevated business confidence to a three-year high, with business owners at their most buoyant since December 2010, according to all current market data. This confidence was recorded across all states and all sectors, with mining firms leading the charge as a result of their desire for the abolishment of the minerals and resource rents tax under the new government.

“The optimistic shift in business sentiment is extremely encouraging”, Alaban states.” In fact, in the lead up to the election we noticed a substantial amount of interest in our listed properties however the confidence to commit was lacking. A level of uncertainty with sellers and buyers lingered with most holding off till post-election”

He goes on to detail, “With the five campaigns we conducted post-election the enquiry rate was very strong. For example, The Beach Hotel campaign received approximately 60 registered enquiries where typically the trend to date has been around 20-30.”

“This data highlights to me that the general lack of confidence that we have been accustomed to over the past few years is now being eroded and the property market as a whole is improving. In terms of campaigns and sales we are expecting a very strong start to 2014”.

Whilst Australia’s property market is on the rebound, the recovery will be slow and gradual. Despite a significant shift in “business sentiment and expectations”, actual “business conditions and performance” over the September quarter 2013 remained relatively unchanged at low levels across most sectors.

Low interest rates equals low cost of debt. With interest rates at historical lows, buyers have the ability to absorb slightly lower returns on their investment as interest rates are not as demanding.

“Lower cost of debt is an immense benefit for buyers looking to grow their asset portfolio”, Alaban explains. “Buyers are able to justify a lower yielding return as they have the ability to lock in lower interest rates over the medium term”.

Alaban also anticipates that the industry should start to witness

Leon Alaban

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greater competition among the banks, particularly in terms of business loans and overdrafts. “Banks are really starting to free up money for the right clients with the right assets in the right location”, he states. ““We are now finding that some buyers are obtaining finance pre-approval before they start putting forward their offer. This is ensuring a much more fluid process from time of contract to day of settlement.”

Investment returns. Currently, yields are sitting at 10-13% for southeast Queensland and 13-16% for regional Queensland. The better quality assets attract more attention and subsequently achieve the tighter yields. Year-on-year yields have tightened a little.

Alaban believes this is aligned with cheaper debt and greater competition (more buyers). “Higher yielding returns should always be sought in the regional locations. It comes down to simple formulae: the more densely populated a city/town is, the higher level of demand and interest is received. For the smaller operators it is a ‘lifestyle choice’ for the larger corporate operators it is the ‘logistics’ of the acquisition, that is travel time and management.”.

Realistic sellers & Genuine buyers are resurfacing. Alaban talks about how the market has shifted from the “good times” in 2007/8 to a more conservative space.

“It’s taken three to four years for buyers and sellers to reach an understanding on market sentiment,” Alaban says. “Yield expectations have now been consistent for the past 18 months. I believe that buyers and sellers are more in tune, there is a greater understanding of the market and both buyers and sellers are adjusting their price expectations to find common ground.”

Given all of the above, demand for pubs and taverns has shifted to a much more palatable acquisition. Confidence has grown and yields are at a stage where both buyers and sellers are able to satisfy their needs.

And so the RBA are of the opinion the Australian economy will continue its slow but steady growth over the coming year, employment will drift modestly upwards and the confidence readings are highlighting better prospects for the commercial property market.

“The recent change of government has been important for both consumer and business confidence”, Alaban affirms. “With strong household and commercial balance sheets and confidence returning, we are expecting and looking forward to an increase in investment and capital expenditure over the next 12 months.”

The Small Bar RevolutionIn all capital cities across Australia, the small bar is the new breed in leisure and entertainment venue and are proving to be popular and lucrative.

This new phenomena, “the cosy micro bar”, are increasing in number and the trend line is showing continued growth according to Christian Tsalikis, Cadet Hotel Sales Executive for RWH Qld.

“There are many and varied boutique bar experiences now available to the consumer and these are

growing in number and popularity as well as in their creativity and diversity of offering” Tsalikis states, “People are now spoilt for choice”.

“There really are no restrictions”, Tsalikis highlights. “Small bars can be specialist cocktails bars, wine authorities or beer boffins, music genre, coffee connoisseurs or just a friendly local to grab a casual drink.”

A small bar is generally defined as being an owner operated venue with a capacity of less than 120 patrons. The small bar scene in Australia largely originated in Melbourne thanks to their heritage “laneway” culture with many of the original small bars opening in the 90’s.

In contrast to the hotel bar experience, the small bar offers a cozy and intimate encounter. They are full of charm, relaxed and have an impressive selection of fine wines, cocktails, beer or what-ever their focus or point of difference is. They tend to be full of character, very intimate, located in the most unlikely places (from laneways to riverside to basements to gardens to houses) and

most importantly pay special attention to the product and “the experience” which consists of three critical components – the product, the ambience and the service.

This explosion of small bars popping up in our capital cities is a direct result of recent changes in the liquor licensing laws making it easier for the general public to create, design and run their own small boutique bar.

The introduction of smaller quirky drinking holes has greatly enhanced the CBD after hours scene and is having a profound impact on Brisbane’s laneways which is helping Brisbane City Council deliver on its strategy to establish a Melbourne-style laneway culture through their “Vibrant Laneways and Hidden Spaces” plan.

“Brisbane’s nooks and crannies are now bursting with life”, Tsalikis affirms, “from late night music and revelry to indulgent coffee, share platters and cocktails – each new bar provides a different and unique experience for the consumer, an oasis away from the hustle and bustle”.

Tsalikis believes Brisbane lends itself to this growing “small bar” phenomena. “The new licence could potentially lead to many more boutique bars, with emerging bars applying for a cafe liquor licence instead of the restaurant or small bar options”, he emphasises. “And there is potential for cafes in suburban locations to be eligible for a liquor licence.”

If you are looking into the small bar market and/or have any questions regarding small bars, please don’t hesitate in contacting:

Christian Tsalikis on 0421 562 262 or c.tsalikis@rwh.net.au

Christian Tsalikis

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Ray White Hotels proudly announces two properties under contract in the Northern Territory

Brenton McCarthy, Hotel Sales Executive, N.T and Western Qld is pleased to announce the first contracted Hotels for RWH in the Northern Territory (NT). The Palmerston Tavern and The Airport Tavern have been contracted by the ALH group in an off market leasehold transaction.

“The vendors provided RWH with this exclusive opportunity to present two quality venues”, McCarthy states. “We are proud to be involved

with this benchmark transaction within the Northern Territory”.

“The Palmerston (Palmy) Tavern, situated 20km from the Darwin CBD, is strategy located in the suburb of Palmerston which has become a major center with a population of circa 30,000 people and one of the fastest growing populations in the country.

“The Palmy has become a popular leisure and entertainment destination for all local residents, particularly families”, McCarthy outlines. “The Palmy features 2 bars, bistro family friendly restaurant with a “kid’s zone”, functions amenities, gaming and TAB facilities as well as a thriving bottle shop.”

The Airport Tavern, situated minutes from the Darwin International Airport and 10 minutes from Darwin’s CBD, offers a full range of facilities including a large family friendly bistro, gaming, two bars, functions and conferencing amenities, a bottle shop and TAB facilities.

“We have no doubt this will be an excellent venture for both tenant and landlord once all sale conditions are met and settlement occurs”, affirms McCarthy.

RWH also recently listed for sale Pandanus on Litchfield, a group of accommodation options including cabins, budget rooms, a camping and caravanning site in Litchfield National Park located near Rum Jungle, en-route to Litchfield and the Batchelor township.

For enquiries, please contact Brenton McCarthy on 0448 355 329 or email b.mccarthy@rwh.net.au

Brenton McCarthy

Management Rights Ramping Up, Not Down leading into end of year

Grant Bailey, Director of Investment Sales Queensland, Ray White Hotels Australia, is a management rights sales specialist delivering a focused and far-reaching approach that is always well-received by the vendors and buyers alike he works with in the tourism and hospitality sector.

“Whilst most are people are winding down for the year it seems I am ramping up with a number of large campaigns concluding and 4 new campaigns starting”.

Current assets on the books include:

Seascape Apartments – Hervey Bay: 15 residential apartments and vacant land on 3,518m2 with development approval for 28 units. All lots to be sold in one line or individually. View by appointment. (Expressions of interest close Thursday 12 December 4pm.)

Surfers Beach Resort 11 – Surfers Paradise: This neat and tidy complex, located at the southern end of Surfers Paradise close to light rail, has a total of 18 units in the complex with a 2 bedroom managers unit. (Expressions of interest close Thursday 12 December 4pm.)

Surfers Hawaiian – Surfers Paradise: a 63 apartment complex with marina berth and boat ramp, resort style facilities including gymnasium, pool and spa and 2 bedroom managers unit on the ground floor. (Expressions of interest close Thursday 12 December 4pm.)

‘Boathaven Spa Resort’ – Airlie Beach: This 28 unit complex, located 250m from the town of Airlie Beach, has a 2 bedroom managers residence with ocean views. (Expressions of interest close Thursday 12 December 4pm.)

For enquiry on any of these properties, please contact Grant Bailey on 0414 818 909.

Grant Bailey

• Lot 2 BUP 9648 • 2 bedroom managers unit on the ground floor• A total of 63 apartments in the complex• Marina berth and boat ramp• Resort style facilities including gymnasium, pool and spa

Management Rights & UnitSurfers Hawaiian – Surfers Paradise

Expression of Interest Closing Thursday 12 December 4pm Grant Bailey 0414 818 909 raywhitehotels.com.auRay White Hotels BM

COAH

0204

Surfers Hawaiian

Outline & Location Indicative Only

Under instructions from Gerry Collins & Matthew Joiner as Receivers & Managers Appointed

BMCOAH 0204_18x148[P]GCB_SA.indd 1 11/11/13 3:05 PM

Ray White Hotels

Expressions of InterestClosing Thursday 5 December 4pm View By appointmentGrant Bailey 0414 818 909 Ray White HotelsDamian Raxach 0403 880 327 Harcourts Hervey Bayraywhitehotels.com.au

• 16 residential apartments & vacant land• Development Approval for 28 units • Choose from dual and triple key apartments • Land component consists of 3,518m2* – Lot 99 – SP 185034 • All lots to be sold in one line or individually

Receiver & Manager Appointed Seascape Apartments

BMCO

AH0188

*approx

Harbour Dr Seascape Apartments Marina The Pier

Outline & Location Indicative Only

Ray White Hotels NSW Update“Since the results of the recent Federal Election, have there been any changes in the NSW hotel market?” Andrew Jolliffe, Managing Director NSW, RWH Australia asks. “Are more people buying and selling.”

Whilst the outcome of the Federal Election were likely assumed well before September 7 2013, it is still an uncontroversial fact that market sentiment has both improved, and continues to improve, immediately following

the recent change of government.

“Of course, the reasons behind the undoubted increase in transac-tional activity are both many and varied”, Jolliffe explains, “However once September 7 was announced as the date for the Election, coupled with the Reserve Bank’s announcement of a further interest rate drop days later (a Reserve Bank 53 year historic low), the real estate market across a range of asset classes burst into activity.”

Jolliffe believes the significance of the Reserve Bank lowering interest rates and its resultant effect on market confidence cannot be underestimated. This, combined with the change of government (irrespective of your political persuasion), remains a key driver of the economy and pub sector following the slow-down of other assets classes including the Chinese economy indexed mining sector.

“As a result, we are currently experiencing one of the best commercial property/hotel market selling environments of the past 5-7 years,” Jolliffe reveals.

A good example of this positive transaction environment can be seen in the form of the Wirrina Cove Hotel, Resort and Conference Centre in South Australia which was recently sold by the RWH’s NSWs team to an international investor. “The sale followed an EOI process we successfully ran on behalf of our client”, Jolliffe discloses, “and came about after a number of unsuccessful campaigns conducted by other national hotel real estate agencies”.

Whilst there’s been a rebound in busines confidence post-election, Blake Edwards, Hotel Sales Executive, RWH NSW, reminds us that there is some hard work ahead for a full recovery.

Reports highlight the renewed longer-term business confidence that has emerged post-election, but not yet translated into business performance and investment. The surge in confidence is not yet backed up by an

actual improvement in business conditions. Business expectations may be changing but capital expenditure plans are flat.

“Despite the three-year confidence high in the outlook for the Australian economy, full traction and benefits are unlikely to be felt until we see growth in business sales, employment and capital expenditure across the sectors”, Edwards reinforces. “Due to the market lag, we expect to see more buoyancy with hotel sales in 2014”.

“The general consensus is buyer enquiry and confidence is improving”. Edwards states, “The market is starting to show movement and activity, and I’m noticing buyers becoming much more decisive.”

“Indications are that the continuing low interest rates are driving this,” Edwards affirms, “although the spike in business confidence post-election and the surging house prices is also filtering through to hotel sales activity.”

This post-election confidence, low interest rates and the lower Aussie dollar will have a positive impact on spending and travel within Australia. Housing loans, refinancing, housing finance have all shown growth and activity thanks to the historically low interest rates. Lower repayments for consumers will also eventually fuel spending.

Economic forecasts are predicting GDP growth to soften to 2.3% this year before gradually rising to 2.5% in 2014 and 2.9% in 2015. Unemployment will exceed 6 per cent by end of this year and peak at 6.75% end 2014.

“There was strong evidence that businesses were suffering, property transactions were soft as a result of the uncertainty and instability of the previous parliament,” Edwards states, “But now it may be a perfect storm for hotel buyers to secure quality assets especially whilst money is so cheap”.

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Andrew Jolliffe

Recently sold by RWH, The Wirrina Cove Hotel, Resort and Conference Centre, located on 1200 acres on the Fleurieu Peninsula in South Australia, presents an impressive mix of conference and event facilities, resort accommodation, restaurants, golf, and marina/water facilities.

Blake Edwards

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Activity in the HunterThe Hunter Valley is one of the largest regional markets in Australia.

It enjoys a multi-faceted and thriving economy driven by tourism, the wine industry, mining, live entertainment, horse breeding and agriculture. Newcastle, the commercial hub for the region, is the second most populated city in New South Wales accounting for approximately 308,000 of the region’s 620,000 residents.

In 1999, Newcastle experienced a setback with the closure of the BHP steel works after 84 years

in operation. After employing approximately 50,000 people for many decades, the regional economy was forced to diversify as a result of the closure.

The Newcastle and wider Hunter economy has strengthened over the past decade as a result of this diversification and unemployment is at 20 year lows. The Federal Government has shown its commitment to the region with the $1.5 billion infrastructure project, The Hunter Expressway.This 40 kilometre, 4 lane expressway will greatly reduce travel time to the lower and upper Hunter Valley from both Sydney and Newcastle.

With construction due for completion in late 2013, the Hunter Expressway will generate further growth in the area. Significant residential development projects in the Lower Hunter are already under construction with a view to profit from the burgeoning population. Likewise the entertainment, hospitality and leisure industry in the area are likely to benefit from an increase in visitor numbers to the area.

‘Market fundamentals, the diverse economy and projected growth makes Newcastle and the wider Hunter Region an appealing market to those looking to invest in quality hotel and accommodation assets’, believes Nick Maclean, Hotel Sales Executive, Ray White NSW whom specialises in this region.

The Lower Hunter Valleys wineries, golf courses, restaurants, various types of accommodation (from luxury boutique to budget accommodation) and its proximity to Sydney and Newcastle attract approximately 2.3 million tourists to the region annually.

Recent transactions successfully managed by Ray White Hotels include The Honeysuckle Hotel on Newcastle Wharf (sold July 2012) and a 33 Unit Accommodation Development in Pokolbin, in the Lower Hunter Valley’s wine region (sold April 2013).

Currently listed for sale exclusively with Ray White Hotels is The Australia Hotel and Motel, Cessnock. This hotel caters to tourists, transient workers and the growing local residential population.

The Australia is capitalising on the aforementioned market conditions and this is reflected in strong earninings, with an annual turnover of approximately $3.5 million and its multiple revenue streams of accommodation, bar sales, food and poker machines. The Australia Hotel and Motel presents a compelling opportunity for buyers seeking A-Grade hotel assets in this region.

Other recent transactions in the Lower Hunter Valley include the 17 room Peppers Convent which sold for $6 million (November, 2010) and the Crowne Plaza Hunter Valley for $45 million (September, 2012).

Nick Maclean

The Australia Hotel and Motel, Cessnock. Currently exclusively listed for sale with RWH

The Honeysuckle Hotel on Newcastle Harbour. Successfully sold by RWH in July 2012

THE HUNTER VALLEY IS ONE OF THE LARGEST REGIONAL MARKETS IN AUSTRALIA

33 Unit Accommodation Development in Pokolbin, Lower Hunter Valley Wine Country.Successfully sold by RWH April, 2013

REMINDER: View RWH new website to see all the up to date property information from around Australia.

www.raywhitehotels.com.au