University of Tasmania scoops up Hobart Midcity Hotel for student accommodation conversion
The University of Tasmania has bought the Hobart Midcity Hotel, with plans to turn the hotel into a student accommodation complex.
While the selling agents Scott Newton and John Blacklow, from Knight Frank, declined to disclose the sale price, the hotel was last sold for $5,049,831 in 1989, Domain Group records show.
The Hobart Midcity Hotel has 101 rooms and is located in the heart of the Hobart CBD on the corner of Elizabeth and Bathurst streets.
The 1813-square-metre hotel, which is seven storeys high, will need to be refurbished to accommodate 140 students by early July. It currently contains a reception, lounge and bar, gaming room with 20 machines and Keno, dining room, conference room with on-site parking for 58 vehicles.
Further works will lift the number of beds to more than 170 by early 2019.
The University of Tasmania’s gradual move into Hobart’s CBD from the southern suburb of Sandy Bay is expected to help maintain a relatively low office vacancy rate. The relocation will add vibrancy to the area, as well as creating create spin-off effects to related businesses, placing upward pressure on jobs growth.
About 1040 beds are in the student accommodation pipeline in the Hobart CBD.
Big changes are tipped for Hobart’s city skyline – especially in the student housing sector. Photo: Sarah Rhodes
Hobart’s office vacancy rate measured 8.1 per cent, Knight Frank’s Southern Tasmania Insight 2018 report showed.
Reflective of tenant demand, the prime vacancy rate was relatively tighter at 6.9 per cent and the secondary vacancy rate was 9.7 per cent.
Prime gross face rents in the Hobart CBD average at $345 a square metre, while no movement in incentives has kept prime gross effective rents stable at $302 a square metre.
“The Hobart commercial market is as strong as it has ever been,” Mr Newton says.
“Yields are as low as they have been and we think there are plenty of investment opportunities.”
The report goes on to reveal that “a return to more favourable economic conditions and a more buoyant labour market have been the catalysts behind an improvement in Hobart’s office market fundamentals”. Employment growth in Tasmania measured 2.8 per cent in the 12 months to November 2017 – more than double the five-year average of 1.1 per cent per annum.
Despite an improvement in jobs growth, Hobart recorded negative net absorption figures of -2,813 square metres in the 12 months to January 2018.
Growing tourism numbers
One positive note has been the increase of tourism in Tasmania over the past year.
“It is no secret that tourism is booming in Tasmania,” Mr Newton says. “We currently have 1.27 million annual visitors and Tourism Tasmania forecasts this to grow to 1.5 million by 2020.
“The Hobart Airport is undergoing a large runway extension, which will deliver direct flights to the Asian markets, particularly China.”
International tourists in Hobart grew by 17.2 per cent in the 12 months to September 2017 – the highest growth of all capital cities. Meanwhile, domestic tourist numbers grew by 8.1 per cent for the year, compared with the 10-year annual average of 1.8 per cent.
