Commercial & Industrial Property News Update

New Zealand - Investors Snap Up Four Big Hotels For NZD 170 million


September 12, 2012

Singaporean investors were named as among the most active purchasers of New Zealand commercial properties.


The recent sale of four big hotels in New Zealand for a reported total of NZD 170 million highlights the sector as one of the most active in Australasian real estate, said Dean Humphries of Jones Lang LaSalle (JLL), who added that the value of hotel property deals had almost doubled.


"There have been sales for AUD 1.5 billion in the year to June, a 96% increase over the previous period," he said. During the period, Asian buyers emerged as the most dominant, but American and Middle Eastern businesses were also active on the scene.

The four New Zealand hotels sold by Humphries were Auckland's Hyatt Regency for NZD 59.7 million, Hotel So Christchurch for NZD 19 million, InterContinental Wellington for NZD 50 million and Princes Wharf Hilton Auckland for an as-yet-unconfirmed NZD 40 million.

Said Humphries, "The Hilton sale will reflect the highest sale price on a dollar-per-room basis, surpassing the sale of Rendezvous Hotel which we sold in 2006 for NZD 113 million or NZD 248,000 per room."

Two of the four hotels are linked to a Singaporean investor. Michael Kum's M&L has purchased the 448-room Hotel So Christchurch - rebranded as All Season Cashel Street - and is now in talks for the 165-room Princes Wharf Hilton Auckland.

Kum is listed on Forbes' roster of wealthiest Singaporeans, occupying the 26th position with his fortune of NZD 825 million. Forbes said that Kum began investing in hotels after selling part of his stake in Australian-listed Miclyn Express Offshore in 2007.

Since 2009 he's acquired 11 hotels in Australia, Japan, New Zealand and Singapore.

"In April he scrapped plans to raise AUD 360 million by listing his M&L Hospitality Trust, after it failed to get commitments from key investors," Forbes said.

Humphries said that Singaporeans remained the most active hotel buyers in Australasia. "Singaporean capital is the most prominent source of investment although (it is) also strong from Hong Kong and Malaysia," he said.

Sellers were mainly Australian institutional or domestic private businesses, with some forced to sell due to receiverships.

Purchasers were not necessarily using funds from their countries of origin, noted Humphries. "Most offshore hotel investors are sourcing debt locally which is great for our banks."

"Many buyers are well-capitalised so (they) have the financial capability to reinvest new capital into these assets by way of refurbishment, expansion and the like," he said.

Humphries added that Christchurch is poised to offer much action to hotel investors, as the city not only needed new buildings for tourists but also a new convention centre.

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