May 20 2019Add to Favorites
Monday this week for me has been back to back meetings with clients, investors, and catch-ups in Melbourne. It’s amazing the visceral improvement in sentiment since the results announcement of the weekend’s election.
Some interesting transactions this week below.
The shortage of hotel rooms, particularly in Sydney, has encouraged a slew of hotel developments.
The latest update from hotel data analyst STR shows while the supply of hotel rooms in Melbourne has risen 4 percent in the year to April, demand has remained relatively unchanged while occupancy has dropped 3.7 percentage points to 77.5 percent.
Melbourne's revenue per available room (RevPAR) has also dropped 6 percent to $133.29. Both of Melbourne's occupancy and RevPAR numbers are the lowest for an average April month since 2013, likely caused by Easter holidays and Anzac Day occurring in the same week, STR says.
Singaporean hospitality company Next Story Group has paid about $45 million for a newly built hotel in Melbourne's Southbank that will be the launching pad for a new hotel brand.
British accommodation group InterContinental Hotels Group (IHG) will open its fifth "voco" hotel in Australia in Sydney's Chinatown with newcomer developer Linzhu Australia.
>>Altis Property Partners, backed by superannuation fund investment mandate, last week announced the acquisition of 61 apartments out of a development of 130 in Sydney’s suburb of Epping. The acquisition represented a 32% discount value to book value and a purchase price of $32 million vs the reported book value of $52 million.
>>Capio recently also announced last week a capital raise of $50 million from high net worth families for brand new bulk discounted residential stock acquisitions. The group anticipates the fund will grow to c.$200 million.
>>There are a reported >5000 brand new completed apartments on the market awaiting settlement or unsold, however, this is likely to be absorbed by the market based on the supply-demand fundamentals noted in the MPFM residential note here.
>>Strathfield sale: A two-bedroom house on 700 square meters at 6 West Street, Strathfield, NSW. Sold at auction for $2.4 million, $300,000 above what the Belle Property sales agent suggested is fair market value.
>>Aqualand has announced a new development in Chatswood: "The Bertram" is a 5420-square-meter site amalgamated from eight houses and 12 townhouses located on Archer Street, Bertram Street and Albert Avenue, the site will yield 600 apartments and offer 10,000 square meters of commercial and retail space.
>>Chatswood has one of the most expensive house prices in Sydney with a median price of $2.3 million.
>> Significant government capital has been invested in the new metro and is going to change Sydney’s corridor, from North Sydney to Artarmon, and Chatswood creating high demand for homes along the metro line.
MPFM sees value in well located commercial office spaces across the eastern seaboard on Australia. MPFM’s 9 Hunter Street, Sydney co-investment is progressing in line with forecast and on course to deliver return double-digit returns. To read more on our 9 Hunter Street Sydney investment. Click here for the latest update.
Mandi Prager is the principal of MP Funds Management. MP Funds Management has provided investment funding for over $1.1bn of real estate-based investments across 22 transactions and produced an average annualised investment return of 21-22% (IRR).
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Despite the fact that sentiment has improved in the residential media and commentary space it looks like we may have a way to go before actual material improvement is seen overall. MP Funds Management invests in all property sectors (commercial – retail- mixed-use), not just the residential debt (and or equity) space. The reason I am so fascinated with the residential sector is that I think the sentiment surrounding the residential space is ultimately what governs sentiment for the larger segment of the population who own our c. 10million residential dwellings. which is a fairly accurate indicator of the overall economy and investor sentiment.
When I started MP Group about 9 years ago, I knew I wanted to create a funds management business. The company started off as an advisory business with the MP Report as a way to market ourselves – we also used it for research purposes. Up until this point I had been in the commercial industrial and residential agency and development space since I was 19. I had years of property experience across all sectors and as a result had developed a strong understanding of our how property behaves.
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