Gurner moves into luxury hotels ahead of anticipated upswing

Melbourne-headquartered developer Gurner is continuing to diversify into hotels, as investment activity in Australia’s hospitality sector is tipped to rebound swiftly after a COVID-related plunge in 2020.

Gurner recently announced the acquisition of a beachside plot in Port Douglas, where it is planning a $60 million ultra-luxury hotel and private residences complex.

The project will feature 16 luxury homes and 18 boutique hotel rooms, while Gurner will also leverage its Samsara Wellness brand to deliver an opulent spa experience for residents and guests.

A new restaurant and cocktail bar will round out the hospitality offering, with Gurner in final discussions with a world class chef to raise the bar in the Port Douglas region.

Founder and director Tim Gurner said the developer would retain ownership of the spa and hospitality offering, but would sell the private residences.

“Port Douglas has been an incredibly important part of our family’s life over the past 15 years and is without doubt our favourite destination to visit in Australia,” Mr Gurner said.

“We want to give back to this amazing town and create something that does not currently exist.”

Mr Gurner said he expected the project to become “truly special”, and was an example of the developer’s intentions to expand its influence in tourism, wellness and hospitality.

“We have been incredibly fortunate over the past seven years to have built a defining portfolio of luxury residential projects along the eastern seaboard of Australia and now we want to take this philosophy and evolve it into something that extends the lifestyle offering through boutique hotels,” Mr Gurner said.

“Now, this project marks the beginning of a new chapter for the brand as we significantly expand our portfolio across a number of complementary sectors.

“We are exploring a number of new asset classes across tourism, wellness, accommodation and food and beverage – these next few years will be all about pushing the boundaries of our portfolio and recreating the luxury experience we provide to our apartment residents, at a much larger scale.”

Construction is expected to start midway through 2021, while at the same time market analysts say hotel transaction activity is currently at a turning point and is expected to ramp up next year.

Research from CBRE showed 2020 was a historic low for hotel sales in Australia, but recent deals indicate a recovery could already be under way.

Just $670 million worth of Australian hotel transactions occurred in 2020, 63 per cent lower than the 10-year average annual sales volume of $1.8 billion.

Of the sales that did occur, overseas buyers accounted for 55 per cent of the deals, with high-quality hotels in Brisbane, Melbourne and Sydney most in demand.

CBRE regional director Troy Craig said while Australia’s borders remained closed to international travellers, there was potential for some owners to pursue spot liquidity trades to recapitalise or pay down debt in 2021.

“That said, the investment market is underpinned by record-low interest rates and central bank quantitative easing policies,” Mr Craig said.

“Sophisticated investors - many of whom were initially priced out of the market in pre-pandemic, on-market sales campaigns - are likely to be well positioned to chase these assets under more favourable terms on their debt facilities.

“As such, an active hotel transaction market is anticipated over the next 12 to 24 months as investors look for medium-term yield opportunities in a world starved of yield.”

One of the latest hotels to come to market is Jerry Schwartz’ Four Points by Sheraton Sydney, located in the Central Park precinct.

Mr Schwartz placed the 297-room hotel up for sale earlier this month and is expecting significant interest in the sales campaign, which is being managed by JLL.

“I see this as an ideal time to sell the Four Points because all the forecasts suggest Sydney will re-bound strongly in 2021 and beyond, and I want to take advantage of the upward cycle,” Dr Schwartz said.  

“While there is additional hotel inventory coming into the Sydney market during 2021/22, much of it is at the top end of the market, where the most likely growth in demand will be in the 4-star market.  

“There is nothing like the Four Points currently available on the market in Sydney.  

“Not only is the Chippendale area renowned for its art and food scene, there is also the prospect of a new technology and innovation precinct – with Atlassian as the anchor tenant – being developed very close to the hotel over the southern area of Central Railway.”