City Developments Ltd has agreed to buy a five-star hotel in central Brisbane from Canada’s Brookfield Asset Management for A$177.7 million ($119 million), as Australia continues to attract Singaporean investors.
CDL, through a joint venture equally owned by its Millennium & Copthorne Hotels and M&C New Zealand hospitality subsidiaries, signed an agreement with Brookfield on Wednesday to acquire the 416-key Sofitel Brisbane Central hotel, giving the Singapore developer its third hospitality asset Down Under.
“The proposed acquisition marks the group’s entry into Brisbane’s hospitality sector,” Kwek Leng Beng, executive chairman of CDL, said in a statement today. “The acquisition presents an attractive opportunity for the group to enlarge our presence in Australia and enhance our recurring income stream.”
The Brisbane acquisition marks the latest in a string of Australian investments by Singaporean companies over the past year, including a 732-unit student housing complex proposed development by Centurion Properties reported last month as well as the pair of office blocks purchased by Frasers Property late last year.
Staying with Sofitel
CDL, the largest non-government-backed developer in Singapore, is paying roughly A$427,000 per key for the Sofitel Brisbane Central hotel, giving it 379 rooms and 37 suites across 30 floors.
Connecting directly to the Central Station railway hub in Brisbane’s central business district the property also incorporates nine meeting and conference rooms that can accommodate up to 1,100 people.
Average RevPAR for Brisbane hotels surged to an average of A$148 in 2022, achieving a nearly 80 percent increase from a year earlier and surpassing 2019’s average of around A$113, according to an Australian Financial Review report citing data from market data provider STR.
Kwek pointed to last year’s rebound in Brisbane’s hotel market as a sign of the Queensland state capital’s status as one of the top hospitality markets in Australia, while predicting future growth.
“Brisbane’s pipeline of over A$20 billion in infrastructure projects will further enhance the city’s position as a world-class sporting, tourism and business events destination,” he said.
With Brisbane set to host the Rugby World Cup in 2027 and 2029, as well as the Olympic and Paralympic Games in 2032, Kwek added that the calendar of sporting events will help to boost the hotel’s revenue longer term.
The hotel will continue to be managed by global hospitality giant Accor Group under its Sofitel brand following the closing of the acquisition in the second half of this year, CDL said.
Located at 249 Turbot Street, Sofitel Brisbane Central is situated in the heart of the financial district and is around 20 minutes’ drive away from the Brisbane Airport. The location is also convenient to top tourist destinations in the city, like the Queen Street Mall shopping district and the South Bank Parklands along the Brisbane River.
Kwek, who also chairs Hong Leong Group, which controls CDL, vowed the group will continue optimising its portfolio of 155 hotels across the world, most of which are held by London-based Millennium & Copthorne.
In Australia, Millennium & Copthorne maintains 38 percent stakes in both the Mercure Perth and the Ibis Perth hotel hotel in western Australia, based on CDL’s 2021 annual report.
Brookfield is offloading the Brisbane hotel at a 1.5 percent markup from its reported asking price of A$175 million when the asset hit the market last October, after holding the property for more than a decade.
At the stated compensation, the property is changing hands at A$420,673 per room, with the Canadian asset manager having acquired the hotel through its A$400 million buyout of Australia’s Thakral Holdings in 2012.
Brookfield managing partner and head of Australia real estate Sophie Fallman told Mingtiandi on Wednesday that the company had received a high level of interest in the asset from potential buyers, given the hotel’s “high-quality unique offering.”
“Hospitality remains an important sector for Brookfield and we continue to seek compelling opportunities around Australia as the sector rebounds post pandemic,” Fallman said. “We also continue to hold a long-term conviction in Brisbane real estate given the market’s underlying fundamentals and growth.”
CDL’s Brisbane buy reinforces Australia’s status as a top destination for Singaporean property investors.
In January, a unit of Centurion Properties, which is the controlling shareholder in SGX-listed Centurion Corp, applied to the City of Ryde for permission to build a student accommodation complex in Sydney’s Macquarie Park suburb at an estimated cost of A$132.17 million.
In October, the Australian unit of SGX-listed Frasers Property picked up a pair of adjacent office buildings in Sydney’s Olympic Park from Dexus Industria REIT for A$160.5 million.