MAJOR RIGHTS DEALS KEEPING BROKERS BUSY
‘Experienced operators and opportunistic buyers’ are active in the permanent management rights market despite the uncertainty posed by COVID-19
THE demand for management rights has lifted on the back of a COVID-19 induced expectation that domestic tourists will descend on the Gold Coast, says a major industry player.
National group Resort Brokers says it has sold rights worth
$10 million since March 1 and has deals worth another $7 million in the pipeline.
The group’s Paul Mueller, who is based on the Gold Coast, yesterday said the sales covered seven properties and included the off-theplan rights to Andrews Projects’ latest Broadbeach tower, Encore.
“We have seen two other major deals go unconditional in the past fortnight.
“We had no idea how things were going to pan out once the COVID shutdowns and travel bans kicked in – the market could have died.
“Instead, within a short space of time, we started getting inquiries from experienced operators and opportunistic buyers.”
Mr Mueller said prices paid for the rights ranged from $547,000 to more than $4 million and the buyers were not just from the Gold Coast but from Brisbane, Sydney and Melbourne.
He said properties with holiday letting were not the sole target.
“The travel bans and restrictions also have led to an increased interest in permanent complexes, as these often have tenants on long-term leases. Demand for permanent management rights will always remain a constant as they provide a more regular cashflow, even during a crisis like this one.
“For buyers who are in a good position with cash available, the next few months will be very interesting.”
Mr Mueller said the biggest challenge facing the managementrights industry was how valuers would respond to the coronavirus crisis in their assessment of the loss of income incurred by operators during the shutdown period.
He said the flow of credit from lending institutions also would play a major factor in the industry in the short-term and medium-term.
“What the lenders’ criteria will be will go a long way to determining how quickly we can return to the pre- COVID-19 volume of transactions.
“Liquidity is key and, until this COVID-19 situation is over, every deal will need to be looked at individually and on its merits.”
Mr Muller said the Resort Brokers’ Gold Coast sales since March 1 included the rights to Sanctuary Palms at Tugun, University Village at Parkwood, Albatross North at Mermaid Beach, Jefferson Court and Coomera Landing in Upper Coomera, along with those to the Vue tower at Broadbeach.