Domestic and international visitors alike appreciate Sydney’s beauty and dynamic culture – from its picturesque beaches, landmark buildings to celebrated restaurants. Studies conducted by the NSW government show that in 2018 alone, visitors stayed in NSW for nearly 100 million nights, allowing hotels in Sydney to enjoy the highest average daily rate nationally, at $232. This is over 15% higher than Melbourne, which came in at second place. As the Australian dollar continues to depreciate against the US Dollar and the Chinese Yuan, it is expected that Australia will become an even more attractive destination for international visitors.

The increase in commercial activity in well-connected metropolitan areas will drive up demand for business accommodation across the city. The North Shore region, which encompasses North Sydney, Crows Nest, Chatswood and Macquarie Park, has nearly 2.25 million sqm of commercial stock as of January 2019. The quality of tenants in the area, ranging from international conglomerates to domestic heavyweights such as Microsoft, Vodaphone and NBN, generates a constant flow of business travellers. Major commercial development projects nearing competition, including 1 Denison Street and 100 Mount Street, will ensure that demand for business accommodation remains robust for the foreseeable future.

Major infrastructure projects set to stimulate growth in key transportation hubs

The $8.3 billion Sydney Metro Northwest is set to transform the entire North Shore region. Set to open in May 2019, it will link Rouse Hill to Chatswood, with intermediary stops in high-growth precincts including Macquarie Park. The number of train services between Epping and Chatswood will increase to 15 an hour in the peak – almost four times as many trains compared to now. The second part of the Metro network, the City and Southwest line will be completed in 2024 extending from Chatswood to the Sydney CBD via Crows Nest, North Sydney, Barangaroo, Martin Place, Pitt Street and Central.

The improvement in transport connectivity will allow both business visitors and tourists the opportunity to maximise their time in Sydney and explore the wide range of amenities Sydney’s metro areas have to offer.

Limited development pipeline restricts supply

Sydney’s limited hotel development pipeline compared to other major cities presents an ideal environment for opportunistic acquisitions.

In 2018, hotels which were completed or under construction in Sydney represented around 12% of the base stock. This represents a substantially lower figure compared to other major markets including Brisbane, Perth, Adelaide, Melbourne and Hobart, with completed and under construction hotels representing between 17% to 33% of the base stock.

The appetite for Sydney hotels from business travellers and tourists, coupled with the limited development pipeline, has created an opportune environment for current and prospective hotel investors.

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