Resort News - Far North Queensland Management Rights Spotlight

MANAGEMENT RIGHTS SPOTLIGHT

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Things are looking up in the north

Aerial view of Cairns, North Queensland

By Grantlee Kieza, Industry Reporter

Prospective buyers for management rights in Tropical North Queensland (TNQ) still have the opportunity to buy at a reasonable multiple this year before an expected rise in 2023.

After the last two years of being choked by COVID - and two years prior to that being buffeted by the turbulence caused by discount overseas airfares - the management rights business in TNQ is ready to take off again.

MR Sales Executive Antonio Curulli said 2022 was the year that would give potential buyers the confidence to get into a property at a reasonable price.

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of tourists will start again.”

property, the Cairns City Palms.

Mr Curulli said because of COVID, property transactions in his area had been reduced to just “a handful”.

Mr Musson told Resort News he and his wife had been involved in management rights for 12 years.

“The adjusted revenue and adjusted nets have come down as well because of the lack of visitors and most of the properties are off their peak,” he said.

MR Sales Executive Antonio Curulli

season to get into management rights, but I think the prices will move up and the multipliers will strengthen in 2023.”

The TNQ market is dominated by holiday letting and that has obviously had problems with fewer tourists because of COVID.

“The market for management rights in 2022 will be reasonably strong,” Mr Curulli said. “If people decide they want to get into management rights in TNQ they will have the opportunity to go and do the inspections, which because of COVID has not always been possible.

“Most of our management rights in North Queensland are bought by ‘sea-changers’ who first visit for holidays,” Mr Curulli said, “and we've had our last two seasons trashed because of lockdowns, so we haven't had that natural flow of visitors and potential buyers.

“I don't feel they will be paying any more than in the current

“We're hoping in 2022 that if open borders remain, the flow

“Most vendors are waiting at least for another year until they ‘get some cream’ on their accounts and their price justification will be no problem.”

Mr Curulli has 30 properties in the north for sale, but vendors are sticking to their pre-COVID prices.

Nevertheless, he recently brokered the deal which saw husband and wife team Linda Sun and Wayne Musson take over the City Plaza Apartments in Cairns.

Linda and Wayne also have other management rights in the area, at the Tradewinds McLeod Holiday Apartments, the Royal Palm Villas holiday property and the Focus on Spence permanent letting complex.

They also have a freehold

PROPERTY

“We started when our first child was born,” he said. “My wife Linda didn’t want to go out to work but rather stay home and look after the family.

“We visited Cairns from Adelaide for a holiday. The place we stayed at was being sold and we began talking to the manager but decided it was overpriced.

“A few months later out of the blue we got a call from an agent regarding another place, Tradewinds McLeod.

We did some research; took the opportunity and we have been here since.”

Mr Musson said the management rights lifestyle in Cairns was a winner.

“We work from home, it’s great. There’s no traffic to deal with going to and from work, we just get out of bed and we’re there,” he said.

“Linda has a background in finance, and I have a background in the trades, so we work perfectly as a team.”

ResortNews | February 2022

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www.mrsales.com.au | 1300 928 556 | info@mrsales.com.au ResortNews | February 2022

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© Martin Valigursky - stock.adobe.com

Four Mile Beach, Port Douglas

Mr Musson said the business was not for everyone, though.

“If people are thinking of retiring and buying a hotel to run, forget it, that’s not for you, try looking at a permanent management rights instead, not a shortterm holiday place,” he said.

“I have never worked so hard in my life, but I’m a workaholic, so it suits me. This work provides a huge assortment of things

to do and I’m not bored yet.

“I’m a trade orientated person with multiple trades. I am hands on in the day-to-day running of the complex from maintenance, renovations and gardening to reception work.

“But you have to know what you are doing to be able to run the place and experience gives you this.”

He said while COVID had seriously impacted holiday businesses in the north, it had also presented opportunities.

though they had been strong also in the two previous years, only to be “decimated every time there was a border closure.”

“You have to start thinking out of the square to keep a place profitable or else you will go under like many places have done,” Mr Musson said.

“On the positive side we have a large number of really highquality properties that are on the market. The multipliers are around 3 to 3.5,” he said

According to Mr Curulli, most properties in his region had “very strong” bookings for 2022,

“Those multipliers are less than they are in South-east Queensland, but COVID has

Introducing Tony Curulli the MR Sales Far North Queensland Sales Specialist After a 35 year career in a variety of roles including consulting roles with Accenture, Corporate Advisory roles with Merrill Lynch (Bank of America), Privatisation of State owned Enterprises with the World Bank in Asia, Special Adviser on Tourism and Investment to the Government of Indonesia, and recently Research & Development of Oil and Gas assets with one of the world’s largest companies Saudi Aramco Oil.

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Tony now owns his own Management Rights complex in FNQ and is very familiar with Far North Queensland Tourism.

He can assist with practical, current and reliable information that can add value to any Management Rights.

Tony considers his strengths to be hard work, tenacity, good listening and quick to understand, strategic, strong communicator and being street wise.

He now lives in Clifton Beach, on the Cairns Northern Beaches and enjoys the idyllic lifestyle of the area and is passionate in ensuring that the region continues to grow and prosper.

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Tony Curulli

ResortNews | February 2022

Tradewinds McLeod

had less of an effect there and traditionally there has always been a difference of about 1 in the multipliers. It has now probably stretched to 1.5 times.

“On our books now, we have properties selling for between 2.8 and 4, and they're still offering a good 30 percent return underpinned by the body corporate salary.

“The approach of the banks up here has been a little bit problematic when it comes to holiday rentals but that outlook going into 2022 should change, and more of the banks now will strongly consider the bounce back in this sector.”

Mr Curulli said most vendors were shy of doing a deal at the moment because their adjusted revenues and profits were not at their peak.

“But a lot of these assets are held with not much debt in them,” he said, “so we don't have a great deal of stressed assets. Most of the people up here are lifestyle owners. So, they only carry a small amount of debt compared with syndicates who are buying up properties in the south.

ResortNews | February 2022

“They can afford to bide their time and achieve their asking price.

renewed interest in short term rental business opportunities.

“Over the last two years, sales have been essentially limited to permanent letting properties and, in some cases, mixed letting. It's only in the last few months we've seen movement in short-term holiday properties and corporate rentals.”

“For most vendors here having to wait a couple of years to sell is no great hardship because they are living and working in such a beautiful area.”

Calvin Bailey, of Calvin Bailey Management Rights (CBMR) remains optimistic about the future of the sector in the north.

He has 25 years’ experience in the Tropical North Queensland industry, specialising in unit sales and the MR business.

He told us: “Cairns has always been able to reinvent itself and will continue to do so, even after COVID it will emerge and evolve.

Before the pandemic TNQ was a vibrant tourism hub, known as the gateway to Asia and I am hopeful it will bounce back.

“In the meantime, TNQ tourism and the short-term accommodation sector is fraught with frustration due to COVID. Although we got away lightly with minimum COVID cases, our visitor numbers were massively impacted by border restrictions and the whole tourism industry has been severely affected,

Calvin Bailey of Calvin Bailey Management Rights

especially in Cairns, The Beaches and Port Douglas areas. I am hopeful numbers will quickly return now interstate borders are open because domestic visitors have confidence in our region.”

Indeed, accommodation occupancy levels improved over the Christmas period in Cairns.

He confirmed: “Recently many properties here, experienced an increase in bookings and I am optimistic that the prospects for those in the holiday letting industry will continue to improve.

Understandably this means there has only recently been a

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Mr Bailey revealed we are now seeing early signs of renewed interest with inquiry levels for properties in TNQ rising.

“The recent level of buyer interest is very encouraging,” he said.

Presently, CBMR has more than 25 properties for sale in the north.

“However, the short term and corporate accommodation market is still very slow, and many vendors have elected to sit tight and wait for 12 months of good figures to show prospective buyers. They hope to achieve a better multiplier,” he explained.

A most recent market update reveals some very good news, that in the last several weeks CBMR has experienced an upward trend.

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Currently Mr Bailey said: “CBMR has quite a few unit sales, along with five MR properties that are under offer, at contract or have just settled.”

He added that he has been impressed by the level of “quality new buyers who recognise the value of obtaining a MR business at a reasonable price in the area”.

Although most of the sales in the last two years have been smaller permanent properties, he also confirmed that he is now seeing some movement with medium and larger sized properties.

On values in FNQ he said: “Multipliers can range from 3.5 to 4.7 and you will notice that these are a much better deal than the multipliers being asked in South-east Queensland. You are getting far ‘more resort for your dollar’ and the prospect of a much better yield.

“Getting value for money is perhaps our region’s biggest advantage over South-east Queensland, where prices, especially on The Sunshine Coast, have gone up dramatically.

“Here, I believe we will see further stabilisation of the multiples within the year, and as international visitors return it will mark the beginning of a whole new and exciting cycle for TNQ. “Remember TNQ and the Great Barrier Reef is a unique environment that normally attracts three million plus visitors from around the world each year.”

Mr Bailey recently brokered a deal that saw a “lovely family” who “will do well in the industry” purchase an MR business at a good price.

Thomas and Kim Taylor settled on their property, The Trinity Beach Club, in August 2021.

Thomas Taylor, manager Trinity Beach Club near Cairns

Meet the Calvin Bailey Management Rights Team Tropical North Queensland for every aspect of selling management rights. Alex was responsible for selling tens of millions worth of rights and associated property.

and Cairns, buying their first management rights business in 1995. As a fully licensed real estate agent, Calvin fully supports the industry and recognises the professional support of REIQ and ARAMA. He uses his industry experience to assist newcomers and offers his clients pre and post purchase support. His many clients value his professional, mature, industry judgement.

Introducing…

Calvin Bailey With almost 28 years industry experience, Calvin has enjoyed exceptional success in sales and establishing client loyalty, since entering this vibrant industry in 2003.

Previous to this, he and his partner Helen operated management rights businesses in Port Douglas, Palm Cove

Introducing...

Alex Barker-Re

Calvin Bailey Management Rights builds professional business relationships with enthusiasm and friendship to deliver an unrivalled comprehensive approach to the management rights sale and purchase process.

Alex provides a breath of fresh air into our business in Far North Queensland.

We are proud of the standards we uphold and very much value our motto of: “We look forward to being your partner in success.”

From 2001 to date Alex has also managed and owned ten different management rights properties, from the Gold Coast to Port Douglas and Cairns.

His approachable manner and industry experience make him a highly desirable contact for all buyers considering entering the industry and for those sellers looking at a possible sale.

For 10 years Alex represented a large Resort Sales Company as their North Queensland Sales Director.

Working with one of the largest management rights brokers at that time, Alex was responsible

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His knowledge of the industry is second to none - having hands on experience of permanent and holiday letting plus off the plan projects.

Now a resident of our great area for over twenty years, Alex has a strong belief in this beautiful region, its resilience, and its added value for the resort and tourism operator.

“What you are buying is not just a home and a business but a lifestyle that is second to none."

Added to this, a purchase in this fantastic destination gives you so much more resort for your dollar. Everyone loves the very real bang for your buck we repeatedly deliver here.

ResortNews | February 2022

YOUR PARTNERS IN SUCCESS MANAGEMENT RIGHTS OPPORTUNITIES IN NORTH QUEENSLAND Consider the advantages - better multipliers, better yields & better choices

CAIRNS – ON THE ESPLANADE

•

Rare opportunity, modern holiday property Total Units/Pool: Agreements: Waterfront views Salary: Low maintenance grounds Net Income: Little COVID impact on business Real Estate (2 brm): Improving profit

•

Manager can reside offsite

• • • •

PERFECT PERMANENT - CAIRNS BEACHES

23/20 25/19 Years $75,276 + GST $320,154 $350,000

Total Price:

$1,595,000

•

Classy low rise permanent in the Cairns Northern Beaches

•

111 apartments with 95 in the pool

•

Excellent business in a quality complex

Total Units/Pool: Agreements: Salary: Net Income: Real Estate (3 brm):

•

Managers 3 brm villa with double garage and large off ice

Total Price:

111/95 25/20 Years $148,688 + GST $358,000 $495,000

$2,200,000

CONTACT CALVIN - 0414 889 593

CONTACT ALEX - 0414 835 128

TRINITY BEACH – MIXED LETTING

PORT DOUGLAS RESORT– WALK TO BEACH

•

Exclusive resort property. Close to beach

•

Excellent facilities

•

Tropical gardens and two pools

•

Good mix of quality 2 & 3 brm apartments

•

Well priced to meet the market. Flexible letting

Total Units/Pool: Agreements: Salary: Net Income: Real Estate (2 brm): Total Price:

98/43 25/18 Years $214,761 incl. GST $276,384 $650,000

$1,755,000

•

Permanent Letting

•

Spacious Two & Three bedroom apartments

•

Great salary $107,285

•

Manager not required to live onsite

•

Huge 4 bedroom manager’s villa with stunning reception

CONTACT CALVIN - 0414 889 593

Contact: Mobile: Email:

Calvin Bailey LREA 0414 889 593 calvin@cbmr.com.au

Total Units/Pool: Agreements: Salary: Net Income: Real Estate (4 brm): Total Price:

CONTACT ALEX - 0414 835 128

Postal Address: PO Box 266 Palm Cove, QLD, 4879

Contact: Mobile: Email:

Alex Barker-Re LREA 0414 835 128 alex@cbmr.com.au

Australian Resident Accommodation Managers’ Association Member

www.calvinbaileymanagementrights.com.au All information/figures are supplied by the seller and are subject to check by intending purchasers

53/34 25/16 Years $107,285 $225,000 $400,000

$1,395,000

© Romain Terpreau - unsplash.com

Whitehaven Beach, Whitsundays

There are 98 units in the complex, with 34 in the letting pool, 10 of them permanent and 24 holiday apartments.

Mr Taylor said he had been working in hotels for a number of years, yet for most of them didn't even know that management rights existed.

“I was chatting to a friend who had just bought into a management rights business in Noosa,” Mr Taylor said.

“It was the first I'd heard of management rights but the more I explored it the numbers all made sense.

“The Trinity Beach Club is a cracker of a property and I think that you get more business value in Tropical North Queensland than you do in the south. There are more opportunities here because the real estate component isn't so highly priced.”

The Taylors were originally looking at buying into a

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property in Noosa and consulted Paul Grant, from Mike Phipps Finance, to start the ball rolling, getting advice regarding bankers, lawyers and accountants. Thomas then met with Tony Rossiter from Holmans Accounting in Noosa and Trent Pevy at Pevy Lawyers.

“I found definitely the best thing was to have a broker helping you out with the bank side of things, and I had the team built up so that once we found the right deal the process went fairly smoothly from there,” Mr Taylor said.

It has been a tough six months in the business so far because of COVID, though.

“Sydney went into lockdown in late July and then Melbourne shortly after,” he said, “and it really destroyed a lot of business in Cairns from August, when we settled, until December. But the opening of the domestic borders on December 17 meant we had a really strong Christmas.

“North Queensland has traditionally had a lot of international tourists and I'm 100 percent optimistic about the future.”

© Caleb Semeri - unsplash.com

The property is a 4-star resort located 30 minutes north of the Cairns Central Business District and tucked between two lush green headlands.

Hamilton Island

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ResortNews | February 2022

The FNQ market update $0 to $200k

$200 to $400k

$400 to $600k

$600k +

Gold Coast - Short/Mixed

3.98 to 4.57

4.59 to 5.43

N/A

N/A

Gold Coast - Perm

3.90 to 5.23

5.50 to 6.45

6.62

N/A

3.6

4.93 to 5.30

5.1

N/A

Brisbane - Perm

3.28 to 5.68

5.47 to 6.20

5.27 to 6.27

N/A

Brisbane - OTP

3.58

4.00

N/A

N/A

Sunshine Coast - Short/Mixed

2.41 to 4.35

4.27 to 5.88

N/A

5.40 to 5.77

Sunshine Coast - Perm

4.54 to 5.01

N/A

N/A

6.1

Townsville - Short Term

N/A

N/A

N/A

4.9

Townsville - Perm

4.12

3.86 to 4.0

N/A

N/A

Cairns/Pt Douglas - Short

3.98 to 4.15

4.00 to 4.25

4.04 to 4.80

4.03

Cairns/Pt Douglas - Perm

3.9 to 4.14

4.1 to 4.14

N/A

N/A

Net Income Brackets

Brisbane - Short/Mixed

Craig Smith, Australian Valuers

Sales of management rights businesses in Far North Queensland and North Queensland are experiencing mixed interest from buyers.

Recently, it appears that interest is building for businesses which are suitable for the traditional ‘two-person management team’ in Cairns and Port Douglas regions, with these areas recording a steady flow of sales.

The Whitsundays region is considered to be a secondary resort investment market compared to Sunshine Coast and Gold Coast.

Airlie Beach has not recorded any sale of management rights businesses since circa 2016, however, there are several properties which are now subject to a contract of sale or have been sold recently, which is a result of increasing tourism to the area, higher tariffs and occupancy.

We are aware there were several properties which were subject to a contract of sale through

Source: Australian Valuers

* Standard Module **Large NRAS ^Not Settled

one purchasing entity during 2018 in Airlie Beach, Palm Cove, Cairns, Townsville and Port Douglas but none of these progressed to settlement.

Airlie Beach market has been less affected by a resource boom as compared to Mackay, as it relied more heavily on the tourism market and holiday visitors.

by weather events in early 2019

Coast and Gold Coast there

(damaging winds and rainfall

has been increasing demand

from ex-tropical cyclone Penny).

from buyers with some MLR

In the stronger and larger

businesses sold without going

markets of Brisbane, Sunshine

to the open market.

The market was affected by extreme weather events in early 2017.

In March of 2017 a category 4 cyclone made its way the east coast of Queensland, blowing through the Whitsunday Islands and surrounding towns.

MANAGEMENT & LETTING RIGHTS VALUATION SPECIALISTS

Airlie Beach saw some significant damage following cyclone Debbie.

The market was also affected

1800 664 094

quotes@australianvaluers.com.au www.australianvaluers.com.au

QLD - NSW - VIC - WA

AUSTRALIAN VALUERS SPECIALISE IN: Holiday Complexes Corporate Complexes Permanent Complexes Student Accommodations Manager Unit Valuations & Rights Time in Motion Reports & Rent Rolls Body Corporate Salary Market Assessments

ResortNews | February 2022

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PROUD MEMBERS OF

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