Value of hotel investment market surges to $56bn

Over the last two years, the value of Australia’s investment grade hotel market has rocketed 26 per cent to $56 billion.

The latest report by Colliers International shows more than 27,000 new accommodation rooms have been added to the market in the past eight years, including 7000 rooms across 46 hotels added in 2018, taking the total to 145,000 investment grade rooms.

The average price per hotel key has risen 25.6 per cent to $386,000, up from $263,000 in 2017. The growth has been driven by the premium pricing of rooms in Sydney and Melbourne which accounted for 43 per cent of investment grade rooms and 57 per cent of the market by value.

Just over half the hotels (56 per cent by value) are still owned by local investors. But Asian ownership has risen to just under a third driven by investment from Singapore and China in particular, the report found.

More than 6600 new rooms are slated to open in the 10 major accommodation markets in 2019, with Melbourne and Perth leading the way followed to a lesser extent by Sydney.