‘Flashpackers’ Drive Rise of East Coast Asset Class

A niche investment opportunity is opening up on the east coast, catering to older and richer backpackers as they return to Australian shores.

Riding off the back of these so-called flashpackers, the Boardrider Backpacker at Manly hit the market with industry expectations around $18 million.

This follows KTQ Group’s flashpacker campaign in April at Bayshore Bungalows Resort, Byron Bay, which is under negotiation.

The listings were announced as Australia reached a new free-trade deal with the UK, pushing the Working Holiday Maker visa applicant age group from 30 to 35 years.

Meanwhile, there were 224,000 of these visas granted in the 2023 financial year, well above Covid and pre-pandemic levels. 

The Sydney asset is being offered in an expressions-of-interest campaign, including the four-storey building with development approval.

Peter Skerrett’s private family office, Invergowrie Properties, appointed CBRE Hotels team to steer the sale of the property, which is between the beach and Manly Wharf.

The 1158sq m dual-frontage stratum has 28 rooms housing up to 120 people in a mix of dorms, double and deluxe rooms as well as a two-bedroom apartment.

It also has a common area, guest reception, coffee outlet, kitchen and a rooftop terrace as well as development approval for a residential property.

The site’s zoning allows for the property to be converted into 12 one and two-bedroom luxury homes ranging from 52sq m to 101sq m, as well as ground-floor retail.

▲ The freehold property at Manly Corso is expected to generate significant buyer interest.

CBRE hotels director Hayley Manvell said the reopening of international borders and the growth in inbound international travel had created a gap in the market for flashpacker-style accommodation.

“Due to the pandemic, a number of backpacker hostels were converted to alternate uses, leading to a real scarcity of budget accommodation in the market today and, consequently, a substantial increase in bed rates and performance across the market,” Manvell said.

“Given its trophy location there is significant scope to reposition Boardriders as a flashpacker asset or boutique hotel to cater to travellers wanting a more upscale and comfortable experience with social and communal areas, co-working space and food and beverage outlets.”

Property investment in the hostel sector remained robust during the pandemic period, with more than $160 million in hostel asset acquisitions since 2021, following a $38-million portfolio of five YHA assets trading in 2020.

Headlining the hostel acquisitions was the sale of Noah’s Backpackers Bondi in June 2022 for about $68 million.

“This flashpacker style of travel has soared by 131 per cent since pre-Covid, largely due to the return of international backpacker tourism with new norms but also as more and more Australians embrace a hybrid lifestyle between remote work and domestic travelling,” Manvell said.

Meanwhile, on Sydney’s Lower North Shore, interest in another alternate asset has ramped up with six-storey boarding house plans lodged for Neutral Bay.