The Novotel & ibis Melbourne Central Hotel has sold for a whopping $170 million in an off-market transaction. The sale price of the dual-branded, high-rise hotel marks Melbourne’s largest hotel asset transaction in more than six years.
The 472-room hotel was acquired by Legend Land Melbourne, a subsidiary of Singapore-based Worldwide Hotels Group.
CBRE Hotels brokered the sale on behalf of Well Smart Investment Holdings as part of the company’s recycling strategy, which saw the firm acquire Lindeman Island in Queensland.
The hotel was taken to the market in 2022 by CBRE Hotels’ National Director Wayne Bunz and Scott Callow before the off-market deal was secured with Legend Land Melbourne.
CBRE attributed the attractive sale price of the hotel to the “rapid recovery” of the Melbourne hotel market, which has “consistently demonstrated its ability to absorb new supply.” The deal was an indication of the confidence international capital investors have in the Australian hotel market due to its safe-haven status and ability to provide a robust inflationary hedge.
“The market benefits from robust corporate visitation and tourist demand and boasts the country’s best cultural and sports events calendar,” said Bunz. “While the city’s elevated, high-quality supply pipeline dampened investment levels over 2021 and 2022, Melbourne is now showing its ability to absorb this new room supply, which is expected to underpin growing investor interest in the market as the year progresses.”
The transaction is a result of the strong recovery in Melbourne’s market, with the city recording the third highest RevPAR growth rate in Australia in the year to April 2023, Bunz said. RevPAR surged 54% compared to the same period through 2022.
“Importantly, this recovery highlights the strong absorption of the 10 hotels that have come online since the start of 2022 in Melbourne, largely supported by a continued recovery in domestic and international tourism.”
While Melbourne’s increased, high-quality supply pipeline demand weakened investment levels in 2021 and 2022, the city is now able to absorb this new room supply, which will underpin growing investor interest in the market throughout the year, Bunz said.
Located on Little Lonsdale in the Melbourne CBD, the hotel was built in 2018 and was Australia’s first-ever dual-branded, high-rise hotel. The Ruize family’s Well Smart Investments had constructed the building on a 1,080-square-meter plot which it had acquired in 2015 for a reported $15 million.
The property consists of 259 lower-level ibis rooms and a 213-Novotel room unit. Amenities include two dining venues, a bar, recreational facilities, conference and meeting areas and covered car parking spaces.
During the pandemic, the hotel was used as a quarantine accommodation.
The acquisition of Novotel & ibis Melbourne Central is the latest deal brokered by CBRE Hotels in Australia this year, following the record single transaction of the Waldorf Astoria Sydney hotel development at 1 Circular Quay and the Sofitel Brisbane Central Hotel.
This deal also marks CBRE’s latest one with Worldwide Hotels Group, following ibis Styles Brisbane and Holiday Inn Perth.
In another record hotel transaction, Worldwide Hotels acquired the Parkroyal on Kitchener Road in Singapore earlier this week, reportedly for $388 million. This represented the largest-ever single-asset hotel deal in Singapore.