Strong demand by local Asian investors for hotel assets and freehold commercial buildings with potential for hotel conversion is a growing trend reflected in recent sales in both the Sydney CBD and fringe markets.
A local Chinese private investor has recently purchased the iconic The Kirketon Hotel in Darlinghurst for $11.3 million from Kirketon Hotel Pty Ltd.
This was followed by another local Asian private investor securing an undisclosed freehold commercial building located close to the corner of York and Market Streets due to its appeal to be converted into a hotel.
Knight Frank managed the off-market sale of The Kirketon Hotel.
Knight Frank’s Executive – Asian Markets, Commercial Sales, Mr Andy Hu said that on the back of the low interest rates and the weak Australian dollar, the Asian investors are currently very active in the hotel investment market in the Sydney CBD.
“The Asian investors are looking for quality hotel assets however there is a significant lack of freehold assets available in the CBD market so there is now a strong interest in assets which have potential to be repositioned as hotels," added Mr Hu.
The Kirketon Hotel, positioned on the CBD fringe, was originally placed on the market two years ago and in weaker conditions, and reflects a positive change in the boutique hotel market.
Knight Frank’s Director – Asian Markets, Commercial Sales, Mr Dominic Ong said that whilst Asian investors tend to focus on assets in the CBD market, there has been an increasing number of investors moving away from the CBD, mainly due to the lack of assets, and are now also looking for fringe CBD assets such as The Kirketon Hotel.
Located on Darlinghurst Road, The Kirketon Hotel is a freestanding three level building which features approximately 1,720 square metres of boutique space consisting of an award winning cocktail bar, an Asian restaurant, and an boutique hotel with a yield of approximately 8.2 per cent.
“Similar to other Asian investors, the prime location is the main draw card for the private investors and the investment yields are viewed as a secondary requirement,” added Mr Hu.
