Australia
2018: Hotels sales up and yields sharpen dramatically

2018: Hotel sales up and yields sharpen dramatically

2018 saw a slight increase of hotel sales volumes totalling approximately $1.8bn, but still just below the long term average of $1.9bn and nearly half of the 2015 peak.

The most dramatic trend in 2018 was a 117 basis point sharpening of the median passing yield of hotel investments. In 2018, the median passing yield was 5.51% compared to 6.68% in 2017 and well below the long term average of 7.57%.

There are a number of reasons for this yield compression. A significant number of acquisitions have been in underperforming locations, such as Perth and Brisbane, where buyers have acquired at below replacement cost and expect trade performance to improve in the medium to long term.  Due to the lack of hotels available for sale and continued low interest rate environment and low value of the Australian Dollar, investment demand has continued to chase fewer available hotels, driving up pricing.

We would expect yield compression to slow in 2019, but demand to exceed supply.

Median Passing Yields & Hotels Sales Volumes

More Information

Learn more about Savills Hotels here and feel free to contact the team for further information. 

author

Posted by:

Adrian Archer

See more articles by Adrian

Contact Adrian

About the Blog

The team at Savills are experts in their respective fields, with extensive experience backed by 150 years of Savills industry knowledge. This makes us well placed to provide you with the most informed view of current trends as well as helpful guides and top tips across the commercial and residential property sectors.

Connect with our team

Connect with our team

Savills on Twitter

Follow us on Twitter

If you have any comments or questions regarding the Savills blog just drop us a line.

Email the Editor