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The iProsperity Group has sold the Park Regis Hotel in Sydney’s CBD for $54.18 million to hotel developer and operator Johnson Yeh.
iPG Group, an investment firm which targets wealthy Asian investors, purchased it for about $44 million in 2016 from Staywell Hospitality Group, representing a 23 per cent gain in less than two years.
The 122-room hotel stratum comprises 10 levels of the 45-storey mixed-use tower at 27 Park Street.
iPG Group chief executive officer Michael Gu said they chose to divest the asset after a surge in value since 2016.
“We identified a clear strategic opportunity to buy the Park Regis in 2016,” Mr Gu said.
“We predicted income would grow due to market dynamics. This prediction has been realised with favourable net income growth during our ownership.”
He anticipates average rates at the hotel to rise further, thanks to recent refurbishments and increased sales and marketing efficiencies.
Mr Yeh, who leads Yeh’s Hospitality Group, has a pipeline of four hotel developments set to open in Sydney’s CBD in the next five years, he previously told Commercial Real Estate. These include the QVB Chambers on York Street, a warehouse conversion on Wilmot Street, one near Hyde Park and another near Barangaroo.
Mr Yeh, whose strategy is to focus on the mid-range hotel market, also owns the former Spanish Club at 88 Liverpool Street, Sydney.
Hotel boom “shows no sign of abating”
Hotel acquisitions are expected to remain buoyant for the rest of the year, due to the long-term shortage of suitable real estate for hotel development and Australia’s tourism boom, iPG’s latest Hotel Market Analysis shows.
These factors have pushed top-tier hotel groups – including Accor, Intercontinental Hotels Group and Marriot – to buy up existing hotel businesses and brands.
“The number of international visitors to Australia continues to climb, with 8.3 million tourists spending up to $42.3 billion until the end of March 2018, up $2.4 billion year-on-year. These visitors spend a colossal 269 million nights in Australia during their travels,” Mr Gu said.
“This upward trend is showing no sign of abating and is resulting in a hotel-buying frenzy in the absence of development opportunities.”
The hotel occupancy rate in Sydney was at 87.5 per cent in the six months to June 2018, showing a nearly 2 per cent drop from the same period in 2017, STR Global data shows.
Colliers International’s Gus Moors and Karen Wales sold the Park Regis Hotel, which is due to settle on October 31, 2018.