Queensland pub demand continues to outstrip supply

29 October, 2020 by Vanessa Cavasinni

The pandemic has hardly dampened the appetite for pub assets in Queensland, with operators and investors from across the country looking for hotels in the sunshine state.

While publicans may have turned inwards during the pandemic, looking to secure their current venues during severe trading restrictions, investors looking to the long-term kept a close eye on the Queensland market, and have once more started the hint for hotel assets.

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Tom Gleeson, vice president of investment sales, said that he’s had several conversations of late with publicans looking to resume the hunt for hotels in Queensland, where yield spreads are favourable.

“If you look in comparison to New South Wales and Victoria, there is a bit of a yield spread in regards to acquisitions. Additionally Queensland’s growth is quite good, on the back of some pretty significant infrastructure projects.”

While there is still interest from Queensland publicans themselves, interstate operators are driving the demand for the larger assets at $10 million or more.

This trend has been occurring over the last five or so years, but was evidenced most recently with the sale of Brisbane’s Elephant Hotels to Sydney-based group Tilley & Wills for more than $20 million; as well as Victorian Michael Dixon re-entering the pub market after a few years away with the purchase of high performing gaming pub, The Central Tavern in Burpengary.

“The Queensland buyers are still there, but those larger assets are being targeted by  southern operators,” stated Gleeson.

The demand is predominantly for freehold assets, but Gleeson says that scalable leaseholds with strong revenue streams – turning over at least $50,000-60,000 a week – are also attractive. Having some form of gaming component underpinning the venue is also a major driver of demand.

As more of the country opens up, both lenders and investors are raring to get transactions going again, but figuring out what the ‘new normal’ for trade earnings is the first priority. Still, the pandemic has not dampened the appetite for Queensland hotels as much as was first expected.

“With a mixture of operator nous and government stimulus,  we’ve got through this in a  reasonably better position than first thought was possible back in March. The demand for quality assets is still there – and stock remains the issue.”