Unprecedented investment is pouring into Hobart

By Michael Mata | 16 Aug 2017

Tasmania’s tourism boom has triggered an unprecedented surge in activity from international developers, and many are ditching mainland Australia for the relatively untapped shores of Hobart.

The city’s growth has been twofold: First, there is the surge in hotels planned for the city’s millions of domestic and international visitors, and second, developers have been pushing for the construction of more residential projects. 

Tasmania had more than 1.24 million visitors during the 2016 calendar year, up 7% from 1.15 million in 2015, according to Tourism Tasmania.

Scott Newton, CEO of Knight Frank Tasmania, said the current demand for Hobart development sites was at an all-time high. “Hobart has generally lagged the national market but we’re certainly seeing change unfold and there’s been a catch-up [taking place],” he said.

This month, Singaporean developer Fragrance Group Limited released its updated plans for a 210-metre-high skyscraper in the centre of Hobart. Situated along the waterfront adjacent to Salamanca Markets, the skyscraper will be nearly three times the height of the city’s current tallest building, the 74-metre-high Wrest Point Hotel Casino. The tower is one of the four Hobart hotels Fragrance Group Limited has submitted plans for, along with the recently opened 296-room ibis Styles hotel.

Independent economist Saul Eslake said Tasmania’s economy will benefit from the jobs created by the incoming construction boom.

“History tells us that with Hobart’s economy there [have] been big periods of optimism before that haven’t lasted, but this time around, in the absence of an increase to the exchange rate, things look to be promising,” Eslake said.

“There hasn’t been significant hotel development in Hobart for the last 15 years and now with an increase of tourists and a low exchange rate there is clearly demand. Tasmania is attracting a certain type of tourist that prefers a more upmarket hotel and visits to wineries and arts festivals.”

The Tasmanian capital now has the country’s third-best performing CBD hotel market behind Sydney and Melbourne, according to hotel analysts STR and Deloitte.

Mark Devine, director and principal of LJ Hooker Hobart Commercial, said that after Chinese President Xi Jinping’s visit to Tasmania in 2014, there was an increase in inquiries from Chinese and Singaporean property developers.  

“Also many people are visiting Tasmania due to [the Museum of Old and New Art] and people might decide to buy a home here as an investment or might come back and look more seriously at opportunities here,” Devine said.

After years of undersupply followed by a surge in house prices, conditions are ripe for a boom in apartment development in the city. “There’s not enough stock about so the timing is pretty good to be doing those sorts of projects,” Devine said.


Related Stories:
TAS Excerpt From The 2017 August Market Report
Property Investors Eyeing Opportunities In Tasmania

 

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