Brisbane serviced apartments fill up, while coast empties out
As we look to what's ahead for 2012, Property Observer is republishing some of our most noteworthy stories of 2011.
Brisbane’s serviced apartment market is mounting an exceptionally strong recovery, in direct contrast to dwindling numbers on the Gold Coast and Sunshine Coast.
Serviced apartment occupancy ratios in Brisbane soared during the March quarter of 2011, rising 65% in January 2011 to 83%, according to ABS data.
Guests spent just over 123,000 nights staying in the city’s 4,800 rooms in March 2011, compared with about 93,000 in January.
While guests are staying for slightly shorter periods (three days in March, down from 3.5 days in January), average takings per room have increased from $147 a night to $172.
The figures suggest the Brisbane market may present opportunities for investors.
Earlier this year, property analyst Michael Matusik suggested investors look at the serviced apartments sector ahead of the lacklustre residential sector.
Matusik calls serviced apartments “residential assets wrapped up in a commercial lease” and says most of the 900-plus serviced apartment projects are taking place in Queensland.
According to the CBRE Hotels Traveller Accommodation Property Database, Queensland makes up nearly half (47.6%) of Australia’s serviced apartment market.
Brisbane is one of the epicentres of growth, with the city accounting for nearly a quarter of all serviced apartment accommodation in the state.
“Serviced apartment products have several advantages over traditional residential investments,” Matusik says.
“Apart from offering pre-tax returns between 1% and 2% higher than standard residential properties, serviced apartments also offer a commercial lease arrangement.”
Furthermore, Matusik says the number of people who stayed in an Australian serviced apartment last year increased to 2.3 million, from just one million a decade ago.
The recovery in Brisbane serviced apartments’ mirrors a strong comeback in the corresponding hotel sector on the back of strong corporate demand.
According to CBRE research, serviced apartments in CBD locations are favoured by corporate travellers while those in regional centres are used predominantly by leisure travellers.
CBRE Hotels senior director for Queensland, Wayne Bunz, said in June the strength of the Brisbane market was spurring strong demand from hotel investors and could push forward a number of major development projects.
Gold Coast languishes
In contrast, the Gold Coast apartment market is starting to wear the basket-case label analysts have placed around its neck.
In the space of three months, occupancy rates have plummeted by 20%, falling from 78% in January to 58% in March, while the revenue generated per night’s accommodation fell equally dramatically – down from $165 to $129.
It’s a similar story on the Sunshine Coast, where serviced apartment blocks are less than half full (48%) compared with 61% in January 2011 and 70% in January 2010.
Serviced apartments currently up for sale on the Sunshine Coast include the 37-apartment Mirage Alexandra Headland at 6 Mari Street, up for sale for $2.9 million by Glenn Millar from Resort Brokers.
Millar is also selling a 49-apartment complex at Coolum Beach on the Sunshine Coast for $2.85 million.
Further up the coast, the North Queensland market is faring better, with occupancy ratios holding steady at 65% in March compared to 66% in January.
