Sydney's first prefab timber hotel sold for $30m
The Clancy hotel is built out of cross-laminated timber.

Sydney's first prefab timber hotel sold for $30m

In a sign of growing confidence in the recovery of the hospitality sector, Sydney’s first prefabricated timber hotel has been snapped up by a local operator for about $30 million before even opening its doors to customers.

The Clancy hotel at 202-210 Elizabeth Street in Surry Hills, not far from where Atlassian will build its own hybrid timber structure at Tech Central, was developed by former Young Rich Lister Paul Fischmann’s 8Hotels and his business partner Jonathan Hasson.

Comprising 38 rooms over six levels, a rooftop area and two ground-floor shops, the hotel was built out of cross-laminated timber by Sydney-based Alessi Design and Build. It is due to open soon.

Given a lack of access to the site, much of the CLT structure was built off site and then lifted into place by cranes. The finished hotel includes plenty of exposed timber throughout the property.

Although it was not their intention to sell the hotel upon completion, Mr Hasson said they had received an unsolicited offer from an “onshore hotelier” and had accepted it.

He declined to name the buyer.

“We very proud to have built the first Sydney hotel out of CLT,” Mr Hasson told The Australian Financial Review.

“Everything is heading that way, and we were very keen to understand how to use it in our projects,” he said.

The sale of the Surry Hills hotel comes amid a strong recovery in occupancy levels and room rates across Sydney.

The latest figures from analysts STR show Sydney’s hotel occupancy rate rose to 67 per cent in May, compared with 53 per cent a year ago, while the average daily rate for a room was $235 up from $190.

Hotel investments are also seen as good hedges against inflation, given the ability to reprice rooms and lift revenue on a daily if not hourly basis.

Joseph Lin from Collier, who brokered the sale of the Surry Hills hotel, said the “post-pandemic recovery story” was driving investment into Sydney commercial properties in prime locations such as the Tech Central precinct.

“With the phasing out of the strict lockdown measures in China, we anticipate seeing more Chinese tourists returning to Australia, giving a boost to the hotel room rate as well as the occupancy rate,” Mr Lin said.

Mr Hasson said he and Mr Fischmann were “very bullish” on the hotel sector,

“Sales like ours and a few others over the last couple of months, show that people are very keen on the space, especially in locations like Surry Hills.

“We’re constantly on the lookout for sites where we can add value and bring our own flavour to them,” he said.

Colliers head of hotels Gus Moors said the sale was testament to the strong long-term fundamentals of the Sydney hotel market.

“Corporate travel is building well, business is bouncing back faster than anyone expected, and the domestic leisure sector continues to underpin the strong rate positions. If we layer in the re-emergence of international demand, and sectors like the cruise ship market re-commencing, the outlook is very positive for Sydney’s trading markets.”