Brisbane's Alliance Hotel likely to prove a hit with investors from southern states

It includes a public bar, bistro and kitchen on the ground level, chalet bar and function room on the lower level, and a function room and manager’s residence on the first floor.

The pub is currently leased to PT Hotels & Property Group Pty Ltd until  2022, with a further two five-year options available. The business is not included in the sale.

The freehold hotel is for sale via an expressions-of-interest campaign managed by Andrew Jolliffe, Brent McCarthy and Glenn Price of HTL Property, and John Dwyer of Ray White Commercial, under the instruction of receivers.

Mr Price said the property would likely appeal to interstate investors looking to get a foothold in the tightly-held Brisbane pub market, without having to pay Sydney prices.

“The pub market in Brisbane is now a national market when it comes to freehold investment hotels,” Mr Price said. “Listings have been few and far between and the market has been starved of investment assets over the past few years.”

The top tier of the Queensland pub market is dominated by the Coles and Woolworths-anchored assets, but Mr Price says a strong market exists for “second tier” assets such as the Alliance Hotel, which has a “thriving independent operator” in place.

The sale of two hotels in nearby Fortitude Valley – the GPO hotel to a Melbourne-based businessman in 2016 and the Wickham Hotel to a Sydney investor in 2018 – showed there was an active pool of interstate investors lured by “softer prices” compared with the southern states, Mr Price said.

Other prominent pub assets on the market include the Victory Hotel in the Brisbane CBD and the Elephant Hotel in Fortitude Valley, which is being offloaded by the Australian Pub Fund.

Mr Dwyer said a city-fringe location and a strong lease covenant made the Alliance as an ideal proposition for yield-hungry buyers. He said while Brisbane assets were undergoing a degree of yield compression, it was nowhere near the record levels being witnessed in cities such as Sydney.

“I think the good thing about this is there is income. What I’m finding is there are a number of future development sites with passing income or holding income which are not attractive to investors. They want a sitting tenant with long-term income,” he said.

The pub’s proximity to hotels, hospitals and the Brisbane CBD ensured a diverse range of patrons, My Dwyer said.

The possibility of a further interest rate cut would only further the interest in hotels such as the Alliance, according to Mr Price.

“Some leading economists forecast that another rate cut is only a matter of time.This has only served to further strengthen the demand for investment hotels,” Mr Price said, citing dwindling returns from term deposits and the long leases generally offered by the hotel sector.

Away from monetary policy, general perceptions about Brisbane’s desirability as a place to live and visit – including the development of a thriving arts scene and dining culture – were spilling over into lifestyle-oriented commercial sectors.