CBRE advises on Melbourne’s largest hotel transaction in over five years

Worldwide Hotels Group subsidiary Legend Land Melbourne Pty Ltd has acquired the Novotel & ibis Melbourne Central Hotel for $170 million as investor sentiment towards Australia’s hotel market continues to grow.

CBRE Hotels brokered the sale on behalf of Well Smart Investment Holdings as part of the group’s capital recycling strategy, which has already seen them acquire Lindeman Island in Queensland.

Legend Land’s acquisition of the 472-room Novotel & ibis Melbourne Central represents the largest hotel transaction in Melbourne in over six years and highlights the confidence international capital has in Australia’s hotel sector outlook.

Simultaneously, Worldwide Hotels Group has announced its agreement to acquire the PARKROYAL on Kitchener Road, Singapore, for a total consideration of US$388 million, the largest ever single-asset Singapore hotel transaction.

The Novotel & ibis Melbourne Central Hotel was built in 2018 as Australia’s first dual-branded high-rise hotel. It comprises a 259 lower-level ibis room component and a 213 Novotel room component, with guest amenities including two restaurants, a bar, conference and meeting spaces, recreation facilities and undercover car parking.

The property was initially taken to the market last year by CBRE Hotels’ Wayne Bunz and Scott Callow before an off-market deal was secured with the subsidiary of Singapore-based Worldwide Hotels Group, an astute long-term, generational wealth investor focused on freehold mid-scale properties in strategic capital city locations globally.

The deal is the latest CBRE Hotels transaction with Worldwide Hotels Group, following the ibis Styles Brisbane and Holiday Inn Perth.

CBRE Hotels’ National Director Wayne Bunz said the latest Melbourne deal evidenced the confidence international capital sources had in Australia’s hotel market, given its safe-haven status and ability to provide a strong inflationary hedge.

“We have strong confidence in the Melbourne hotel market and its rapid recovery, given it is Australia's most populated city and the nation’s events capital, which has consistently demonstrated its ability to absorb new supply. The market benefits from robust corporate visitation and tourist demand and boasts the country’s best cultural and sports events calendar,” Mr Bunz said.

“The acquisition of the Novotel & ibis Melbourne Central is the latest 2023 Australian deal brokered by CBRE Hotels, following Australia’s record single transaction of the Waldorf Astoria Sydney hotel development at 1 Circular Quay and the Sofitel Brisbane Central Hotel.”

“The Melbourne transaction followed a strong recovery in the city’s hotel market, with Melbourne recording the country’s third highest RevPAR growth rate in the year to April 2023, growing by 54% compared to the same period through 2022”.

“Importantly, this recovery highlights the strong absorption of the ten hotels that have come online since the start of 2022 in Melbourne, largely supported by a continued recovery in domestic and international tourism”.