Paul Fischmann’s 8Hotels and business partner Jonathan Hasson have sold Sydney’s first hotel built out of cross-laminated timber to an onshore hotelier for about $30 million.
The six-level hotel at 202-210 Elizabeth Street in Surry Hills comprised 38 rooms, two ground-floor retail spaces and three outdoor terrace areas.
Built by Sydney-based Alessi Design and Build, the hotel was constructed out of cross-laminated timber, offering a much lighter environmental footprint than concrete or steel.
Hasson said they were extremely proud of what they had built.
“We spent three years constructing the hotel and are very pleased with the sale price achieved, especially having just come out of COVID,” Hasson said.
Colliers National Director Asia Markets Joseph Lin, who sold the property off-market, said astute investors remained very interested in Sydney commercial properties in prime locations.
“It’s not difficult to understand the acquisition strategy of this newly completed hotel in the heart of the Tech Central precinct, the largest technology and innovation hub and urban revitalisation project in the foreseeable future,” Lin said.
“With the phasing out of the strict lockdown measures in China, we anticipate seeing more Chinese tourists returning to Australia, giving a boost to the hotel room rate as well as the occupancy rate.”
Colliers Head of Hotels Gus Moors said the sale was testament to the investor’s view of the strong long-term fundamentals of the Sydney hotel market.
“The recovery in trading gets better each month, with citywide occupancies now moving toward 70% and average rates approaching nearly $280 across the CBD,” Moors said.
“To put that into context, the Sydney CBD had a rate of around $250 for the full calendar year of 2019.
“Corporate travel is building well, business is bouncing back faster than anyone expected, and the domestic leisure sector continues to underpin the strong rate positions.
“If we layer in the re-emergence of international demand, and sectors like the cruise ship market re-commencing, the outlook is very positive for Sydney’s trading markets.
“When you consider that hotels price their inventory on a daily (if not hourly) basis, it’s an asset class that can weather an inflationary environment well.
“Consequently, we are seeing the capital markets now keenly focused on the sector.”
Earlier this month, Singaporean investment firm High Street Holdings bought the Rydges North Sydney hotel from Event Hospitality & Entertainment for $75 million, with plans for further hotel acquisitions in Australia.
Other recent hotel deals include Singaporean group Well Smart’s sale of the ibis Budget Melbourne CBD hotel to Capit.el Group in February.
Last November, Well Smart also sold the Mantra Terrace Hotel in Brisbane for a speculated $16 million.
Hotel deals reached about $800 million in Australia during the first quarter of 2022, up 291% year-on-year, according to Real Capital Analytics.
For the year to March, Australian hotel transactions rose by 119% to $2.9 billion.