Australia should expect development slowdown, experts warn

Australian city lights at night.

After years of growth, experts are saying hotel development may be set to slow down in Australia.

“There are strong signals that suggest if a project is not currently under construction or shovel ready then the probability of it proceeding has diminished over the past twelve months,” said Troy Craig, managing director of strategic advisory Australasia, JLL.

He links the sector’s acceleration to the residential sector’s slowdown, particularly with the residential and mixed-use developments.

However, the hotel development boom seems to be coming to the end of its cycle.

“Those considering new hotel developments really need to ensure their borrowing plans are firmly locked in and that their feasibility analysis is up to date and independently prepared in order to satisfy the inevitable questions from their lender,” Craig said.

Australia had been experiencing a hotel shortage in the late 2000s, and early 2010’s because of strong growth in inbound tourism before investors jumped on the opportunity to develop properties.

“Though there is still a shortage of modern luxury hotels in some markets to cater to the growing cohort of wealthy Asian tourists, investors will broadly welcome this slow-down in the current development cycle.”