Another Sydney Hotel Sale Signals Strong Pub Market

The Rocksia Hotel in Sydney's inner-west has sold for $36 million after less than two weeks on the market.

Close to $1 billion in pub sales have taken place in New South Wales over the past 18 months in 36 separate transactions, and yields continue to sharpen in a strong market.

Recent sales include the Royal Hotel at Bondi for over $30 million, the Hotel Centennial in Woollahra, John Singleton's Icebergs and The Republic Hotel in Pitt Street.

CBRE sold the landmark Arncliffe property on behalf of Feros Hotels. It was purchased by Oscars Hotels, headed by brothers Bill and Mario Gravanis.

CBRE Hotels Daniel Dragicevich and Sam Handy negotiated the sale, which exhibited a sub 8 per cent yield, which the agent's said reflect of the high cash flow operation, as well as the site’s future development potential and location.

The hotel is located within the burgeoning Wolli Creek to Rockdale growth corridor on a large 4,218 square metre island site on the Princes Highway, adjacent to the Banksia Train Station.

Once a former car showroom and sale yard, the property was converted into a large format suburban hotel some ten years ago by Nick and Chris Feros with long-time business partner Bob Richards.

CBRE Hotels national director Daniel Dragicevich said hotel sites with development potential has become an emerging market subset.

"A growing number of astute groups continue to assess quite aggressively as a natural hedge against traditional hotel operations on which valuation can be more reliant upon sustainability of income as opposed to property value,” he said.

CBRE Hotels NSW director Sam Handy said the market has been incredibly buoyant over the last 18 months given the well-publicised sell down strategies of Lantern Hotel Group and the Australian Pub Fund.

"We’ve seen significant yield compression across the board.

"Nonetheless, we expect that favourable market conditions will continue to underwrite strategic investment in pubs as an asset class into 2018 and beyond.”