NZ investor pays record price for hotel

New Zealand’s largest private hotel investor has purchased an Auckland hotel for more than $55 million.

CP Group has bought the 247-room Novotel Ibis Auckland Ellerslie for a record price of just over $55 million in the face of strong offshore interest.

Dean Humphries, Colliers International’s National Director of Hotels, says the sale represents the highest price achieved for a non CBD hotel in New Zealand and a yield of 7.76%.

“Just as significantly this transaction bucks the trend of overseas buyers snapping up major hotel assets around the country.

“The last three major hotel sales in New Zealand this year have all been to offshore investors from Asia Pacific.”

Humphries says CP Group has a strong local knowledge of New Zealand’s tourism and hotel landscape and was able to quickly identify the significant, current benefits and future potential for this hotel.

“These include record occupancy levels and revenue growth, culminating in greater profitability and rising hotel property values.

 “There were very strong levels of enquiry for the hotel with more than 70 qualified parties registering their interest, and multiple bids from both domestic and offshore investors.”

Humphries says this is also the largest hotel transaction in New Zealand since the sale of the Hilton Auckland in 2012.

Colliers International’s latest hotel market research report, New Zealand Hotel Market Snapshot, notes that New Zealand is currently enjoying a major tourism boom, with more than three million international visitors visiting our shores for the first time in a one year period. This is 7.8% increase on the previous twelve months.

Looking ahead, Colliers reports predicts New Zealand will enjoy further increases in inbound visitation numbers over the medium term given the added benefit of a lower New Zealand dollar and the country’s growing reputation as a safe holiday destination. This is supported by recent research by the Ministry of Business, Innovation and Employment (MBIE) that has forecast annual international visitation numbers to reach 3.8 million by 2021.

RevPAR growth (Revenue per Available Room) in many of New Zealand’s major tourism centres is now reaching 10% to 15% per annum, well above many of Australia’s leading cities like Melbourne and Sydney.

This high level of return has captured the attention of many overseas investors.

Humphries also notes that we are also witnessing the first stages of the next transaction cycle with over $200m in sales recorded in the first nine months of 2015, up by a staggering 500% over the same period in 2014.

“This has been highlighted by the recent sales of the Novotel Ibis Auckland Ellerslie, Kingsgate Wellington, Chateau on the Park Christchurch and Hotel Grand Chancellor Auckland Airport.

“Further sales are likely this year and the first quarter of next year due to a number of major hotels currently on, or about to come to, the market.”

 An increasing number of vendors are now looking to take advantage of unprecedented market conditions to test their assets’ values in the open market says Humphries.

The New Zealand Hotel Market Snapshot report finds that the prices being achieved for hotels sold in recent months confirms that there is a ‘recalibration of pricing’ occurring in the marketplace.

Humphries says the significant improvement in bottom line profitability and compressing investment yields is resulting in record values, particularly in our main markets.

Note:  Novotel Ibis Auckland Ellerslie is a 247 room hotel built in 2000, located near the Greenlane Motorway Interchange, just eight kilometres from Auckland central business district.

For further information please contact:

Dean Humphries

National Director | Hotels | Colliers International

Tel:  +64 9 358 9896 | Mob +64 21 408 156   

Email: dean.humphries@colliers.com     www.colliers.co.nz  

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