Mollymook Ocean View Motel with approval for 28 apartments hits the market
A long-held motel in Mollymook is appealing to both accommodation operators and developers after its owners renovated the property and secured approval for a 28-apartment project.
The Mollymook Ocean View Motel occupies an elevated 3014-square-metre site on the NSW South Coast. Currently, it comprises 12 guest rooms and an owner’s residence, providing an established business and holding income while a buyer considers the approved redevelopment.
The tenanted motel and pub is scheduled to go to auction on October 11 with a guide of $3.75 million.
Optionality is a key selling point
The couple selling the motel had owned and operated it themselves for more than a decade, without staff. Although they pursued development approval to strengthen the property’s appeal, they lacked the capacity to carry out the project.
“That leaves the incoming owner with two clear options,” says ResortBrokers’ Sarah Hutchins. “They can continue operating the motel as it is – a 12-key property with an owner’s residence – or pursue redevelopment.
“This flexibility was a key reason for us taking the property to auction next month with a guide price of $3.75 million, representing exceptional value given the asset’s current profitability and significant development potential.”
The current owners invested about $100,000 in renovating the rooms, and the business produced net earnings of more than $240,000 in each of the past three financial years, rising to more than $256,000 in the most recent financial year.
“It’s trading really well, and, more importantly, it’s trading consistently,” says Hutchins. “There’s a strong business for someone who simply wants to buy it and keep operating it as a motel.”
The development approval allows for 28 boutique residential apartments across three storeys, with secure underground parking and an 11-metre height limit. The proposed mix comprises five one-bedroom, seven two-bedroom and 16 three-bedroom apartments.
The site’s elevated position and outlook are expected to be major drawcards for a residential scheme with unparalleled ocean views towards Collers Beach and Jervis Bay, as well as an outlook over Mollymook Golf Course.
Although the approval is residential, some individual owners could potentially use apartments for short-term accommodation, subject to the relevant rules and approvals.
Regional accommodation assets in demand
The campaign arrives as well-located regional accommodation businesses continue to attract buyers seeking operating cash flow, while coastal development sites remain tightly held.
In this case, Hutchins expects interest from both groups, though she said inquiries to date had included a substantial number of buyers assessing the property primarily as a motel.
“Good motels in great locations like Mollymook are in hot demand at the moment,” she explains.
“At the same time, I can easily see a developer being attracted to the site. The existing motel would provide holding income while a redevelopment is planned, which is a huge advantage.”
A redevelopment would remove 12 traditional motel rooms, which Hutchins estimated represented about 5 per cent of Mollymook’s motel supply. She argues the effect on visitor accommodation could be limited if some of the approved apartments entered the short-term rental market.
The auction will therefore offer a useful measure of how the market prices two distinct propositions on one title: a small, profitable coastal motel ready for its next operator, and an approved residential project with income in place before construction begins.
