VOLume one VALUABLE INSIGHTS INTO THE SUNSHINE COAST MANAGEMENT RIGHTS MARKET, RECENT SALES AND EMERGING TRENDS.
COAST. Demand outstrips supply in surging management rights market BY GLEN N M I L L A R As visitor spending in the Sunshine Coast region continues to climb, and after three years of exceptionally strong sales activity, demand for management rights now far outstrips supply. Latest TEQ figures show we welcomed 3.3 million domestic and 307,000 international overnight visitors YE March 2018. Combined, they spent an estimated $2.3 billion (+1% YoY). News reports consistently reflect what many resident managers tell us: they haven’t seen trading this good for a long time. Our tourism market is certainly enjoying a purple patch. So, it’s timely to review our management rights market, particularly in regard to holiday accommodation. HOT SPOTS While the entire Sunshine Coast is enjoying robust demand, there are certainly several locations best described as ‘hot spots’. The common feature, or course, is beach frontage. Noosa - Noosaville is and will remain a highly sought destination, and Noosa’s Hastings Street the most prized. Other popular beachside precincts Mooloolaba, Caloundra and Cotton Tree follow closely as among those in highest demand.
MULTIPLIERS I am always asked what multipliers are doing. It’s tough to generalise. They vary from location to location, and really depend on how many ‘boxes have been ticked’ by the seller at listing. Consistently, Noosa attracts the highest multipliers. And Hastings Street, particularly beachside, will always come in a few points above comparable properties elsewhere, due to scarcity and high net returns per unit to the manager. We have negotiated several recent sales in the street that have exceeded expectations. That said, businesses that deliver very high net incomes, circa $400,000 - $500,000, will command a premium anywhere, purely by virtue of demand (high) and supply (very limited). Recently, a large number of management rights sales have occurred throughout the region, leaving a marked shortage of stock coming to market. Competition is strong for any quality business to enter the market at this time of high demand. FINANCE SITUATION Banks still support management rights on the Sunshine Coast, albeit more cautiously and with a higher level of | ONE |
scrutiny, given recent credit tightening. The ‘Gallery Vie’ ruling, after which many banks reviewed lending policies, can still be an issue, making it critical for buyers to seek the right advice. Your choice of lender may never have been more important. This is where specialist industry finance brokers come to the fore. They know who has what policy, and how to navigate the process. The period for finance approval also takes longer now, so brokers and advisers should allow for this, to avoid extensions in the contract process. BUYER PROFILE Large investor groups and corporate buyers are tending to dominate the higher end of the market, making it harder for ‘mum and dad’ investors to gain access to larger management rights offerings. Still, we frequently deal with many successful private operators who’ve worked their way up, building businesses, upgrading and going on to own bigger and better properties. We’re also seeing the buyer profile slowly change from baby boomers to 30-something couples, many with young families, moving into the industry.
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