Diamant Hotel provides sought after Sydney investment opportunity

Sydney, 17 July 2014 – The Diamant Hotel at Potts Point is to be offered for sale via an international Expressions of Interest campaign, providing a rare opportunity to secure a boutique asset in Sydney’s tightly held hotel investment market.

Rob Cross and Wayne Bunz of CBRE Hotels have been appointed as the exclusive sales agents for the inner city property, which is located at 2-14 Kings Cross Road, just 2km from the Sydney CBD.

The offering includes the four-star, 76-room hotel over five levels, a ground floor restaurant that is currently leased to the Hatters Restaurant & Bar, a mezzanine conference/function space and three meeting rooms.

The hotel is being offered with Vacant Possession or with a management agreement with the current operator, 8Hotels.

“The opportunities to invest into Sydney are extremely limited, particularly for an asset that affords vacant possession,” Mr Bunz said.

“Furthermore, a number of existing hotels in this prime fringe CBD location are likely to be transformed into residential apartments in the short to medium term, which will potentially eliminate much of the existing competitive stock in the area.”

Originally constructed in the 1970’s, the property began life as the Hyatt Kingsgate and in subsequent years became the Millennium Hotel. In 2007, the building was subject to a major overhaul and was converted into a mixed use strata titled property, which included the 76 room Diamant hotel.

Mr Cross said the hotel offered significant upside potential, with an existing DA to increase inventory with an additional four rooms on Level 2. There is also a vacant mezzanine space that could be repositioned as a state-of-the-art function facility.

“In light of the Vacant Possession potential, the hotel presents a rare opportunity to re-badge and reposition a Sydney hotel,” Mr Cross said.

“Whilst the hotel property has enjoyed trading growth in recent years, there is potential for further trading upside through upgrades or refurbishment.”

The strength of the Sydney hospitality sector is expected to be another draw card for investors, particularly offshore groups looking to secure a foothold in the Australian hotel market.

“Sydney is considered a priority destination for foreign capital into Australia,” Mr Bunz said.

“Without exception, global investors, particularly South East Asian and Chinese groups, will not enter other Australian markets until they have their initial acquisition in either Sydney or Melbourne.”

The Sydney hotel sector has enjoyed strong growth in recent years with average occupancy rates sitting above 85%. Supply levels have also remained relatively unchanged over the past decade, which has underpinned the city’s strong hotel trading environment.

Mr Bunz said the market was also expected to benefit as a result of existing properties being touted for residential conversion – among them the Stamford North Ryde, Stamford Macquarie Street, Vibe North Sydney and Menzies Sydney.

“Of particular significance to the Diamant is the fact that a number of additional assets in the near vicinity, including Vibe Rushcutters Bay and Mercure Potts Point have been touted as potential conversion opportunities, which would further diminish stock levels,” Mr Bunz said.

Expressions of Interest campaign close Thursday 28th August 2014.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue).  The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.