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News release

Sydney

Sydney markets’ continue to strengthen

Sydney’s CBD and metropolitan hotel markets experiencing some of the strongest trading conditions in the country


The Sydney hotel market has continued to grow from strength to strength for the year-to-date 2015, with occupancy at 88% and an average daily rate of $233, according to JLL's review of the latest STR results.

"Demand for Sydney hotel rooms is at an absolute premium Monday through Thursday and this should only increase further once Barangaroo and the International Convention Centre are completed in the coming years. Whilst some new hotels will come on line, they will largely service market growth." said Craig Collins, CEO Australasia, JLL Hotels & Hospitality Group.

Mr. Collins added, "It's no coincidence these trading conditions have corresponded with one of the most active periods the Sydney hotel investment market has ever experienced, with the sale of The Westin Sydney, Hilton Sydney, Sofitel Wentworth, Sheraton on the Park and Four Seasons Hotel Sydney all taking place in the span of a little over two years. Global investors now perceive Sydney the same way they do Paris, New York, London and Hong Kong. They see Sydney as having excellent fundamentals and a very positive growth outlook."

In a further positive sign, Sydney's hotel sub-markets are also experiencing unprecedented trading conditions. In the nine months to September, RevPAR is up 9.7% in the Sydney Airport Precinct, 6.7% in Parramatta and 18.5% in Ryde. Occupancy and Average Daily Rate levels in the three markets are now in-line with, or above, many capital cities.

The Sydney Airport Hotel Precinct is an incredibly strong hotel market being perfectly positioned to capture demand from Sydney's Domestic and International Airport, together with its excellent connectivity to the Sydney CBD and the surrounding established commercial and industrial precincts of Mascot, Alexandria and Port Botany.

"The Airport precinct has a dynamic, diverse and growing demand base. It services Australia's busiest Airport which catered to around 38.5 million passengers in 2014 and is forecast to receive around 74.3 million passengers annually by 2033. It is also anticipated that the area will see its population increase four-fold by 2026 due to over $1 billion worth of residential apartment developments that are either under construction or planned to proceed," said Peter Harper, Senior Vice President, JLL Hotels & Hospitality Group.

Meanwhile, Parramatta's hotel trading market is expected to further improve over the medium term on the back of considerable public and private development into what is now the recognised CBD for Sydney's greater western region. In addition, a reduction in supply is anticipated as one major hotel is currently being sold as a future residential development site. This is expected to have further positive implications on trading for assets situated within this market.

In Sydney's north, hotel trading growth in Ryde has been exceptional with a major driver being the closure of one hotel in what is already a small market. The apparent on-going strength of commercial tenants within the locality's corporate office parks, the recent re-opening of the Macquarie Shopping Centre, and a general population increase have also contributed to the strength of the market. Whilst demand drivers are expected to remain strong, hotel trading growth may be tempered by the impending opening of two developments, a Holiday Inn Express (192 rooms) and Quest Serviced Apartments (60 apartments).

"These strong trading conditions are being recognized globally. Following our recent sales of hotel assets such as Chifley Penrith and Holiday Inn Sydney Airport, we would easily receive several calls a week from investors across Australia and Asia in particular who are seeking suitable stock in these markets. Apart from the Pullman Sydney Airport, there are no other metropolitan opportunities available for hotel investors across Sydney which is in many ways astounding," said Mr. Harper.