A New Zealand pub about 25 minutes north-west of Auckland is being pitched to Australian investors who are struggling to break into the tight Sydney and Melbourne markets.
The Riverhead Tavern – which began trading in 1857 and is believed to be the oldest riverside tavern in New Zealand – has been put on the market with early interest at $NZ11.5 million ($10.7 million), according to JLL Australia Hotels and Hospitality Group vice president Will Connolly.
The tavern, which also holds the second oldest liquor licence in the country, looks over the upper Waitemata River and played a part in the early development of the country by providing an access point to the north of the island before the completion of road and rail links.
Mr Connolly, who is marketing the property with New Zealand colleagues, said that the high yields of New Zealand pub assets meant it would be an attractive proposition for Australian-based investors.
“From a passive sense, looking at the Australian market from an investment standpoint, this asset is on a much more attractive yield than in Victoria or Australia in general,” said Mr Connolly, who is based in Melbourne.
“We’re in a fairly tight market within Victoria but more specifically in Melbourne, and it’s difficult to secure high-volume, freehold assets with a trading level like this,” he said.
Pub yields in metro Melbourne range from 4 to 6 per cent and in metro Sydney they range from 7 to 9 per cent, according to research from CBRE.
Pub values in Australia’s biggest cities have boomed in recent years, particularly in Sydney – with hotel magnate Arthur Laundy describing the city as a “crazy market” with people paying “silly prices”.
Mr Connolly said these conditions had resulted in a broader trend of inbound capital to the New Zealand hospitality sector from Australian-based investors.
“In recent years, the New Zealand hospitality market has seen an influx from Australian-based capital, with prominent operating groups identifying the advantage to secure assets at a level that is near on impossible in the Australian market given the tightly held and competitive environment,” he said.
The Riverhead has undergone an extensive renovation in recent years, with current owners Stephen and Paula Pepperell spending about $NZ6.42 million and expanding into three distinct trading operations.
Those areas include a bar (the Portage), and a restaurant (the Landing), as well as the Boat House function centre.
The 5131-square-metre site comes with two adjoining vacant residential sites of 1201 square metres and 1252 square metres. There is also owner accommodation.
Mr Connolly said that this expanded layout and the amount of surrounding land made it difficult to point to comparable sales in New Zealand or Australia.
The property last changed hands in 2010 after being subject to a mortgagee sale, according to the Riverhead website.
The tavern can be accessed by road or water – with a jetty and pontoon providing easy access for ferries.
“The iconic offering in West Auckland presents a huge opportunity with a spectacular riverside location that is easily accessible by road and ferry with a substantial pontoon, jetty and pathway leading directly to the venue,” said JLL New Zealand director of hotels and tourism Nick Thompson.
“The bonus of water access means regular ferries, as well as personal recreational vessel and tenders from superyachts, can gain direct access from the Auckland Anchorages to the hotel.”
Mr Thompson said that the suburb of Riverhead and surrounds had traditionally been known as a wine-producing district, but recent upgrades to the motorway had seen an increase in the local population and increased demand for hospitality outlets.
“The market for properties of this nature is developing, particularly in the West Auckland area with a number of family-friendly, bistro-style restaurants and microbreweries appearing. However, none of these can be directly compared to the multiple income streams and iconic nature of The Riverhead,” Mr Thompson said.
The Riverhead Tavern is to be offered to market via an expressions of interest campaign closing on Thursday November 14.
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