Sydney Hotel Values Increase
The value of Sydney hotels continue to rise and are now at their highest point in two years, according to the latest Property Council of Australia Hotel Valuation Index (HVI).
The latest quarter results for December 2005 show that for a typical 4-star Sydney hotel, the average annual income return was 9.57%, up from 9.33% in September 2005. The average capital return was 7.72%, up from 5.96% in the previous quarter.
The total return index, benchmarked against a typical Sydney CBD hotel in 1995 shows an increase of 240% above this value. This represents a substaintial increase from the benchmark figure of 177% in 2003 and 143% in 2000.
“The HVI shows that hotel values continue to rise, which is underpinning a strong hotel sector,” said NSW Executive Director, Ken Morrison.
“Sydney hotel values - measuring income and capital return - performed strongly in the December 2005 quarter and this augurs well for the whole tourism and leisure sector.”
“In recent years, the sector’s performance has been driven by annual income returns of over 9 %, whereas capital returns have averaged between 5 and 7% per year. However for these income returns to continue, Sydney needs to do more to attract the tourism dollar.”
“Now six years on from the Olympics, Sydney needs a greater focus by government on how to boost tourism demand and drive the growth of Sydney’s tourism assets.”
“More attention needs to be given to attracting major events, growing convention and exhibition business and driving tourism demand into new and existing markets.”
The HVI is benchmarked via the quarterly performance of a generic 4 star, 250 room hotel located in Sydney’s CBD since 1995, producing a likely selling price of the hypothetical hotel.
Source: Australian Property Review APR
