The Rocksia Hotel in inner west Sydney has sold for $36 million after less than two weeks on the market, as pubs continue to trade well.
Feros Hotels sold the property to Oscars Hotels, which is led by brothers Bill and Mario Gravanis, in a transaction handled by CBRE’s Daniel Dragicevich and Sam Handy.
The sale of the property at 299 Princes Highway in Arncliffe, a mainly industrial suburb, closed on just less than 8 per cent yield.
Once a former car showroom and sale yard, Nick and Chris Feros and long-time business partner Bob Richards converted the 4218sq m property into a large format suburban hotel 10 years ago. Feros Hotels bought the site for $5.6 million at the time.
The pub, located adjacent to the train station, also has development upside.
“Hotel sites with development potential is an emerging market subset which a growing number of astute groups continue to assess quite aggressively as a natural hedge against traditional hotel operations on which valuation can be more reliant upon sustainability of income as opposed to property value,” Mr Dragicevich said.
Mr Handy said the market has been “incredibly buoyant over the last 18 months” with yield compression across sales. More than $900 million in pub transactions had closed in NSW in the past 18 months.
“Nonetheless, we expect that favourable market conditions will continue to underwrite strategic investment in pubs as an asset class into 2018 and beyond,” Mr Handy said.
The last high-profile pub trade in Sydney was two weeks ago when bar tsar Justin Hemmes bought the Medich family’s last pub, the Hotel Centennial in Woollahra in Sydney’s eastern suburbs.
The Oxford Street watering hole sold for $15 million.
In the similar price range, the Republic Hotel opposite the Australian Stock Exchange, sold for $35 million last month.