It's only going upwards for Australia's hotel real estate sector. After a nice run in 2015, analysts from Colliers International, JLL Hotels & Hospitality Group and Ray White all believe that this strong market is going to continue by 2016, Vanessa Cavasinni of The Shout reports.
Hotel investors can keep the smile on their faces with Colliers International's 'Property Outlook' forecasting guide. Based on the guide, a synergistic effect is taking place between consumers and investors; with the former's high confidence inducing that of the latter's. This has created a flurry of real estate activities in the past months which are expected to continue in 2016.
"We have experienced a sustained increase in business confidence over the past 12 months," Kenny stated. "This confidence is having a positive impact across the property sector, and this optimism is starting to flow through to several of our occupier markets, as businesses become more confident."
Apart from the strong consumer confidence, Stephen Burt, managing director of Hotels - Asia Pacific for Colliers International also sees the depreciation of the Australian dollar as one of the contributing factors in the strong hotel market. This has boosted tourism as seen in the increase of overseas visitors by 6.6% in the past 12 months. With the Australian dollar projected to remain stable, both international and domestic tourism are believed to remain strong.
The real estate activities are also expected to move from Sydney, where the spotlight is in 2015, to Melbourne and other major cities in Australia.
"An increase in the supply pipeline is expected in the Brisbane, Adelaide and Melbourne markets through to 2019, with limited new supply expected in the Sydney market. Although not all proposed developments are likely to proceed, there will be pressure on existing inventory to refurbish in order to remain competitive."
This is proven highly possible after the result of Hotel Investor Sentiment Survey undertaken by JLL Hotels & Hospitability showing that a large number of offshore investments - mainly from China - are headed to Melbourne.
"The fundamentals remain so positive. Legislative headwinds are comparatively benign, consumer sentiment is high, debt both cheap and liquid, and the depressed Australian dollar is stimulating inbound visitation rates for our capital cities and tourism precincts across the country. When all distilled, there's little surprise we have a weight of equity and management ability chasing what, in reality, is a disproportionately small number of A-grade investment properties."
