John Musca of JLL has identified a few noticeable trends emerging from a buyer’s perspective in the market.

"The first is a renewed focus on funding and the parameters around debt securitization, injecting a slightly more preparatory approach into acquisitions than evidenced above the past 12 months."

"The second would be the flight to scale and continued consolidation of the asset class whereby public and private groups continue to bolt-on earnings via acquisitions that meet their bespoke expansion strategies."

When commenting on enquiry from interstate and overseas players, Mr Musca advises that the Sydney market remains tightly held representing the most compressed yields in the country.

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John Musca, the National Director for JLL Hotels & Hospitality Group

"There is heightened interstate enquiry directed to towards markets where value is perceived as better such as South East Queensland and regional New South Wales."

"Overseas interest in pubs is not expected to increase other investment via existing private equity structures. Less than 0.25% (a quarter of a percent) of pub hotels in Australia are owned by private overseas interests due traditionally to a lack of understanding of the asset class, the risk of having an industry so inexplicably linked to state-based legislation and some foreign ownership rules around gaming machine licences."

Looking ahead to 2019 and the next five years, Mr Musca expects continued transactional appetite, legislative certainty, unrelenting pursuit of aggregation models, re-emergence of leasehold hotel opportunities nationally and the reengineering of the two national hotel behemoths – Coles and ALH.

Having transacted the largest pub sale of 2018 the Australian Hotel and Brewery for $50 million on behalf for private owners to now publicly listed Redcape group, Mr Musca has also recently sold the Royal Hotel in Bondi which has settled to Merivale, where Justin Hemmes has already seen his extraordinary intuition and community empathies turn it into an outstanding success.

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Royal Hotel in Bondi sold by John Musca

Further commenting on the market, Mr Musca states that as Australia’s largest pub operators, the imminent acquisition of the Coles and Spirit Hotels by Australian Venue Company, and its subsequent planned IPO, and the mooted demerger of ALH from Woolworths and associated touted IPO, are going to change the shape of the industry.  This will reflect in valuation metrics and influence demand driver dynamics from both an investment and divestment basis.

See also:

"Pub buyers moving north into Queensland" - Power Jeffrey & Co, CBRE Hotels

Manly beachfront pub 'Hotel Steyne' for sale - Gus Moors, Colliers International

"Sydney accommodation market performs well in 2018" - HTL Property