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Management Rights Shine in Tough Conditions

With the average return on short term property management rights on the Sunshine Coast at 14%, Resort Brokers Australia predicts a surge in buyer interest as other investment opportunities become less attractive.

The company’s Sunshine Coast representative Glenn Millar, said buyer interest in the area from New Zealand, absent for a number of years, had returned with two of his three last sales to Kiwi buyers. He said that buyer enquiries from the UK were also increasing.

After a slow start to the year, occupancy rates for Sunshine Coast properties were now trending upwards. “With a fine Easter, April occupancies soared with many holiday complexes reporting the best April results since 1997.

“May, the traditionally quiet month, was in most cases stagnant, however bookings since then in many areas have been trending upwards. A number of clients in Noosa, Maroochydore and Mooloolaba have reported strong growth and in a number of cases have closed June and July at over 70% occupancy, and in a number of cases, over 80%. Strong advance bookings activity seems to be rising and many operators are optimistic that this year’s peak holiday season will be solid,” Mr Millar said.

The company has sold and settled three management rights contracts since July 1 with three more under contract. “We have just taken to contract the largest management rights to ever be offered on the Sunshine Coast that attracted a number of expressions of interest culminating in the sale to an experienced operator with a number of other properties.

Financiers are strongly supportive of the industry with lending ratios up to 70% in many cases, as this sector is seen as low risk and as funds are accounted for in audited trust accounts it’s the only business we know of where banks will lend based on one year’s figures only,” Mr Millar said.

Management rights make up the largest portion of tourist accommodation on the Sunshine Coast, with approximately 260 management rights operating from Caloundra to Noosa. Over 85% of these properties cater for the short term tourist market and the remainder for long term or permanent stay markets.

When asked to give an overall snapshot of the market, Resort Brokers Australia’s managing director, Ian Crooks said that the company had sold 54 properties since January 2011 making the year to date far stronger than for the same period during 2009/2010.

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Glenn Millar

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