How a decision by Chinese investors has caused Sydney hotels sales volume to dive

by | Feb 26, 2018 | General News

In 2017, Sydney, Australia’s previously red hot hotels market eased its growth and racked up a massive total of $2.02 billion in transactions

In 2017, Sydney, Australia’s previously red hot hotels market eased its growth and racked up a massive total of $2.02 billion in transactions, with Victoria actually accounting for 45 percent of the overall sales volumes, experts have said.

In fact, officials from Colliers International have said that a one third decline in deal activity since 2016, another challenge, stems from a lack of significant five-star hotel deals and, perhaps most importantly, the withdrawal of Chinese investors, an event that some industry officials have connected to governmental restrictions on foreign spending. It is this withdrawal of Chinese investors, more than anything else, that seems to have put a stopper on the growth of hotels sales volumes in Sydney.

The Significance of this Shift

It is, of course, hard to truly gauge if a downward shift is significant without having a control to measure it against. In the case of Sydney, consider the ecstatic highs that the hospitality sales market experienced there back in 2015, when $3.75 billion worth of hotels changed hands, which would have been a significant amount of sales for any market in the world.

Hotel experts say that the three years separating now from 2015 were dominated by major five-star hotel sales in Sydney, driven investments from the Chinese.

The Importance of Offshore Capital in Sydney’s Growth

What is perhaps most important to note is how important offshore capital has been toward growing Sydney’s hospitality market in recent years.

Offshore capital has, essentially, dominated the market, making up as much as 62 percent of new acquisitions in 2015. This year, however Chinese investors have dropped to 9 percent of deals, which is a significant decrease from the 40 percent level they represented back in 2016. Although some experts say that other investors from a list of countries that includes Vietnam, Japan, the United Arab Emirates, Germany, and the United States have picked up some of the slack.

Signs of Hope in Sydney and Elsewhere

The good news, however, is that there is also significant cause for optimism about the hotel market in Sydney as well as throughout the rest of Australia.

Melbourne, for example, has had some of the major deals that in prior years had been powering the growth in Sydney. Melbourne’s strong showing is also expected to continue after news broke recently that Marriott International planned to relaunch its Le Meridien brand on the site of the Palace Theater there at the top of Bourke Street, opening a $250 million Marriott hotel at Docklands.

Marriott International is the largest hotel company in the world, and it is often a bellwether for the rest of the industry. In other words, as goes Marriott, so goes a number of other major hotel owners and operators, which could be cause for even greater optimism about the Australian hospitality market in the coming year.

Let’s take a look at a few other projects currently underway in Australia:

QT Hotel Parramatta

Yuhu Hotel

The Porter House Hotel, MGallery by Sofitel

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