With the NSW state government’s lockout laws set to be repealed in all but one Sydney precinct by early next year, experts are predicting that many of the revellers who were pushed in to other suburbs such as Newtown since the laws began in 2014 are likely to remain loyal to these new areas.
Experts say for all their perceived flaws, the lockout laws have helped open the eyes of a new generation to the entertainment offerings outside of traditional nightclub hot spots in the inner city and Kings Cross.
They say increasingly sophisticated consumer tastes and a diverse range of venue options to match – as well as a sense of loyalty to their “local” – mean Sydneysiders are unlikely to abandon establishments in suburbs outside the lockout zone once the laws are repealed.
A red-hot pub market throughout the state, which shows few signs of slowing down, also indicates that there’s little chance the repeal of the laws will put a dent in pub values in the inner west, according to agents.
Controversial laws rolled back
The state government recently announced that the lockout laws will be rolled back from January 14, allowing alcohol to be served until 3.30am and removing the 1.30am last-entry rule for all venues in Sydney’s CBD, including Oxford Street. However, the laws will remain in place in Kings Cross.
Dan Brady, chief executive of the listed Redcape Hotel group, recently told The Sydney Morning Herald that the changes – when enacted – were “likely to trigger some ownership changes, particularity in the CBD” as a direct response to lifting valuations.
Andrew Jolliffe, director of Asia Pacific Region at HTL Property, which specialises in selling pubs, said: “The lock-out law repeal is both a welcomed tonic to a fractured stalemate, and evidence of well-managed policy which the industry has flagged as the ignition switch so desperately needed to reignite Sydney as a once again regarded and legitimate international destination.”
But for pubs operating outside of the lockout zone, many of which have thrived during the lockout law period, the impact of the repeal is tipped to be business as usual. One of the precincts to have benefited most from the laws – at least in terms of patronage – is the inner-west suburb of Newtown.
A 2016 report on the impact of the lockout laws, which were introduced in 2014, found that the changes had coincided with an influx of patrons to the Newtown area.
“… there are a number of people now patronising establishments in Newtown in preference to Kings Cross and perhaps the CBD,” wrote former justice Ian Callinan in the executive summary of his 2016 Review of Amendments to the Liquor Act 2007.
“Opal card data for Newtown railway station shows a growth of some 129 per cent for the night time period in 2014-2016. Not all this growth is necessarily attributable to the amendments, but it does well exceed that for the eastern suburbs rail line [Bondi Junction, Edgecliff and Kings Cross] for the same period,” the report stated.
Ben McDonald, director of Capital Markets – Hotels at CBRE, said the repeal of the laws was a “great thing for the city” but would only “change the dynamic a little bit” in Newtown and surrounding suburbs.
“The city will draw people in and keep people in for longer but I think the overall benefit [to the fringe markets] will remain,” Mr McDonald said.
The laws had had the effect of pushing people into pub markets they would not previously have considered, creating a new generation of regular customers in suburbs such as Newtown, Surry Hills and Balmain.
“To be honest I think [the lockout legislation’s] been a huge win for those markets and for specific venues, and what it’s done is pull a lot of people into those areas that never would have considered those areas previously. I think those venues will retain those people after the repeal because they’re great venues and they’ve become a lot of people’s new ‘locals’.”
With the value of pubs at near record highs throughout the state, and many of them tightly held, it was also unlikely that a resurgent CBD market would strip away the value of pubs in Newtown, he said.
“I don’t think so. As far as the pub market is concerned the demand is significantly outstripping supply and there’s appetite all through the NSW markets right now,” Mr McDonald said, adding that the recent sale of Balmain’s Unity Hall Hotel for about $20 million was testament to the market’s strength.
John Musca, national director of JLL’s Hotels & Hospitality Group, said current high pub values in the inner-west market weren’t a direct result of the lockout laws but instead a reflection of this strong demand and the high barriers to entry in the sector – meaning any changes to legislation were unlikely to affect values.
“[There’s been] no boost in values [resulting from legislative changes] – the increase in hotel pricing is consistent throughout Sydney, and reflects the high barriers to entry and inherent value in hotel licences, gaming assets and trading approvals more than anything,” Mr Musca said.
Different tastes, different markets
Mr Joliffe said most patrons attracted to the newly revitalised CBD areas would be visitors to Sydney, with suburbs such as Newtown likely to retain regular patrons.
“With Sydney’s population growing by 100,000 new residents annually, established fringe CBD suburbs like Newtown are particularly well placed to continue the momentum currently enjoyed. The likely increases in visitation numbers in the CBD proper will be heavily skewed towards international and interstate visitors – a market which, frankly, has been largely neglected for the duration of the trading hours prohibition.”
Mr Musca said Sydney’s night-time culture had become more sophisticated in the years following the introduction of the lockout laws, with the days of a singular entertainment precinct such as Kings Cross being enough to satisfy nighttime revellers were well and truly over.
“When lockouts were introduced in 2014 it was towards the end of the nightclub era and the burgeoning and problematic crowd collectives that we had in the CBD, Oxford Street and Kings Cross hot spots. It was also around the same time that small bars legislation was introduced which significantly changed the hospitality habits of Sydneysiders for the better.”
“We’ve evolved since then with far more choice in our drinking, dining and entertainment environments and with it has come a new selectivity, effectively dispersing patrons throughout the metropolitan areas. Newtown has such an eclectic mix of hospitality alternatives, and a live entertainment hub in the Enmore Theatre, that if anything [the repeal of lockout laws] will assist with recreating a level of containability around patronage,” he said.
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