Record hotel sales expected to exceed $ 300 million despite pandemic

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Hotel sales are expected to set new records this year, and the pandemic has not brought prices down, according to Colliers International.

The real estate company tracks sales of hotels with more than 50 rooms, and National Hotel Manager Dean Humphries said sales to date were already well above $ 120 million for the full year last.

With a number of significant hotel deals set to close in the last quarter, there was a good chance that total sales for the year would exceed $ 300 million, the highest hotel deal volume on record.

Humphries said demand was such that the properties were selling privately without being listed on the stock exchange, mostly to domestic buyers who were a mix of established operators looking to expand and new investors.

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The Rendezvous hotel in central Christchurch will undergo a complete renovation after being recently sold.

Chris Hutching / Tips

The Rendezvous Hotel in central Christchurch will undergo a complete renovation after being recently sold.

Most activity was in the lower end of properties under $ 20 million, reflecting the fact that international buyers, who typically had more to spend, were being excluded by the border closure.

In the past, they made up half of all hotel buyers, but were understandably reluctant to commit without being able to enter New Zealand to inspect properties in person, in addition, many large hotels with MIQ contracts were inaccessible, said Humphries.

“When you buy a really large hotel asset, you have to visit the property to see it and do your due diligence. “

There were a significant number of non-traditional investors interested in motels and hotels, as government contracts for MIQ and emergency housing provided guaranteed income.

“When the borders reopen, they will be able to see what has happened in the United States and Europe where the market has rebounded very quickly.”

Lilly Cooper, owner and manager of Hotel Montreal, George Cooper-Dixon, has sold to fellow hoteliers in Christchurch, the Patterson family.

Joseph Johnson / Stuff

Lilly Cooper, owner and manager of Hotel Montreal, George Cooper-Dixon, has sold to fellow hoteliers in Christchurch, the Patterson family.

Bargain hunters can be disappointed. Some owners wishing to retire or rebalance their portfolios chose to sell if a buyer made a fair offer, Humphries said, and there was no evidence of “troubled sales.”

The Christchurch market was particularly busy.

The CPG Group, which already owns two hotels in Canterbury, Terrace Downs and Hanmer Springs Hotel, bought the Rendezvous Hotel with plans for a major renovation and rebranding to a five-star Fable hotel.

Christchurch developer Lilly Cooper has sold the Montreal boutique hotel to the Patterson family, owners of the Commodore Airport Hotel, which currently provides MIQ accommodation, and the Queenstown Park Boutique Hotel.

The 88-room Cosa, New Zealand’s first modular hotel, also changed hands last month.

Bayleys Hotel National Manager Wayne Keene has confirmed that it was sold to a foreign buyer for around $ 19 million and will operate under the Carnmore name after undergoing its third name change since opening there has almost two years under the name Arden Hotel.

Keene said small and medium-sized hotels “are doing well” and low bank interest rates are making investors in the bank look for opportunities with better returns.

New Zealand's first modular hotel at the corner of Colombo and Salisbury streets in Christchurch was built with units made in a Vietnamese factory.  It sold for around $ 19 million in early September and will be renamed Carnmore.

Provided

New Zealand’s first modular hotel at the corner of Colombo and Salisbury streets in Christchurch was built with units made in a Vietnamese factory. It sold for around $ 19 million in early September and will be renamed Carnmore.

At the start of the pandemic, there were concerns that motel tenants would end up moving away from businesses decimated by the border closure.

But that hadn’t turned out to be the case, Keene said, in part because of the level of domestic tourism and because motels that won government contracts for emergency or transitional housing, pushed those further. who take care of kiwi travelers.

Older hotels and motels located on large plots of land are also attracting the attention of buyers who may see the potential for future residential developments, especially in light of sweeping changes to allow for housing densification.

The average density changes will allow landowners in Auckland, Hamilton, Wellington and Christchurch to build up to three stories and up to 50% of their land without resource consent.

Colliers is marketing the 6,433 square meter Christchurch Airport Motel as a future residential development site due to its proximity to the airport, Burnside High School and Russley Golf Club.

Humphries said older, dilapidated motel units in other areas could potentially be “bolted” to make way for “living quarters.

“In Auckland, there are hotels located on two to three hectares of freehold land in prime areas and zoned half-acre motel blocks of medium to high density.”

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