Sydney to see six new hotels in the near term | Real Estate Asia
, Australia

Sydney to see six new hotels in the near term

These hotels will add over 1,400 rooms to the market.

Two new hotels, totalling 230 rooms, have opened over the year-to-date September 2023, which represent 1.0% of total room stock. JLL said this included the 192-room luxury, Capella Sydney and the 38-room boutique hotel, 202 Elizabeth (formally The Clancy).

Here’s more from JLL:

Six new hotels are currently under construction in Sydney CBD and surrounding fringe suburbs, representing a net increase of 1,441 rooms, or 6.4% on existing stock. It is expected that future development activity will be relatively constrained in Sydney, given the limited availability of sites, elevated construction costs, macroeconomic challenges, and the availability of development finance.

RevPAR continues to recover, supported by an uplift in occupancy

As of YTD September 2023, revenue per available room (RevPAR) increased to sit at AUD 233, which represents a 46% increase from previous year, and has now recovered to be 11% above pre-COVID-19 levels (YTD September 2019). This recovery has been driven by strong ADRs and a steady uplift in market occupancy (35% y-o-y). However, occupancy still remains 10% down on pre-COVID-19 levels.

Sydney remains the most active transaction market in the country, having recorded the strongest investment volumes of any city over the past two years, with in excess of AUD 1.6 billion of transactions settling (across 12 deals). This includes the recent landmark transaction and forward funding of the Waldorf Astoria Sydney development project, for a reported AUD 520 million. 

Outlook: Market recovery anticipated to continue into 2024

The stabilisation of the market remains reliant on the ongoing pick-up in corporate and meeting demand, alongside the continued recovery in overseas visitation. This is anticipated to be supported by a return of Australia’s top pre-COVID-19 source market, after China reinstated Australia to its ‘Approved Destination Status’. 

Despite current headwinds and the increased cost of debt, investor appetite in Sydney remains strong. Capital is predominately targeting both aspirational assets, be that trophy or strategic, and assets with value-add and upside potential.

 

Note: Sydney Hotels refers to all grades of accommodation and includes both hotels and serviced apartments.

 

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