Perth, 27 May 2015 – Major infrastructure and property development projects will create significant demand in the Perth hotel sector - benefiting existing hotels and new projects - according to a new market review from CBRE .
Major projects, including Elizabeth Quay, City Link, Cathedral Precinct, Burswood Stadium and the $750 million upgrade of Perth’s Domestic and International Airports, are among those highlighted in the CBRE Hotels review, which calls into question recent speculation about a potential surplus of hotel rooms in Perth.
CBRE Hotels Senior Director David Kennedy said the level of current and proposed development activity would create demand that had not seen before in the Perth hotel market, to the benefit of existing hotels as well as new room supply.
“This progressive development will combine to create Perth as a true international city and encourage both tourism and corporate activity - but only if new room supply occurs,” Mr Kennedy noted.
“It’s not that long ago that the Perth Convention and Exhibition Centre suffered from lost conventions and conferences because of our room shortage. Perth was also lucky to host CHOGM in recent times, with visitors for this conference forced to stay as far away as Mandurah and The Vines and Joondalup Country Clubs, up to 70km from the CBD.”
Recent industry reports have focused on the potential for over 2,000 short stay hotel rooms to be delivered to the Perth market by 2018.
However, Mr Kennedy said this did not represent a glut in light of the significant infrastructure and property developments underway or in the pipeline, adding that consideration must also be given to the different levels of accommodation to be produced in the city.
He added that Perth’s economy - while subject to a series of peaks and troughs over time - had been a growth story, on a median basis, in the past decade.
“While the downturn in the mining sector has clearly impacted Perth, economists are predicting better times within two years. Much of the hotel product under construction or in the pipeline will not be completed for three years, which will be perfect timing for the next wave of demand,” Mr Kennedy said.
CBRE’s review highlights a series of major infrastructure and development projects in Perth, including;
> Elizabeth Quay, an MRA project of $2.6 billion including retail, permanent residential, luxury hotels and commercial offices. Recent commitments include Chevron for offices and Far East with a Ritz Carlton Hotel and mixed use development.
> City Link, a 13.5ha land parcel over the Perth railway line connecting Northbridge to the city which already includes the $360 million 15,500 seat Perth Arena and four major office buildings in Kings Square to be completed at the end of this year, plus a hotel site which will be developed by the Minor Group.
> Cathedral Precinct, this includes the heritage St George Cathedral, Bishop House, extensive basement car parking with public open space above, the new City of Perth Library, the adjoining multi-storey office tower committed to the State Government and the Treasury building, which is being finalised as a 6 star, 48 room hotel.
> Burswood Stadium, construction has commenced on the new Perth Stadium which will be a major tourism attraction in Perth with a 60,000 seat stadium to be completed in 2018.
Other projects include a $400 million upgrade of the WA Museum and the $750 million airport upgrade, which will include new domestic terminals adjacent to the current International terminal, which will also be significantly expanded. Also planned are major upgrades for vehicular access, including interchanges at Tonkin Highway to provide and facilitate passenger movement from the Airport to the City.
The Forrestfield rail link will also provide public transport by virtue of a rail system from Forrestfield to the Perth Domestic and International Airports through to the city by the Bayswater rail link.
In regard to new hotel supply in Perth, the CBRE Hotels review highlights that the majority of new supply is the 5 and 6 star bracket, namely;
The Treasury Hotel in the Cathedral Precinct - 48, 6 star rooms
The Ritz Cartlon on Elizabeth Quay - 204, 5 star rooms
The Westin Hotel on the Fire Brigade Site - 360, 5 star rooms
The Burswood Crown Tower Hotel - 506, 5 star rooms
Mr Kennedy said this would provide long overdue product at the upper end of the market, with no five star hotel having been delivered in Perth for around three decades.
To cater for longer stay leisure and corporate visitors, new Quest apartments are also being constructed in Adelaide Terrace, 98 units (130 keys) and Mounts Bay Road (73 units).
“Those hotels not commenced but likely to in the next twelve months in Perth city include a Hilton Double Tree Hotel on the waterfront in Old Perth Port of approximately 230 rooms and The Marriot comprising 330 rooms on Wellington Street, both of which will add much needed 4 star product to supply our midmarket corporates and leisure visitors. We also need more 3 star rooms to support leisure tour groups and the convention market,” Mr Kennedy said.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 52,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 370 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
