Airlie Beach buying a golden investment

by Grantlee Kieza 11th of May, 2022

Airlie Beach buying a golden investment
© Michael Evans / Adobe Stock

Airlie Beach is one of the most alluring travel destinations in Australia and few places deliver as much bang for a buck in the management rights industry.

Cairns-based Geoff Ellis from Premier Business Sales has a contract about to settle on the Boathouse at Airlie Beach, which has been managed by Mantra for the last decade or more.

He says properties on the gateway to the Whitsunday Islands deliver much greater returns than those in more populous destinations in South East Queensland.

“The Boathouse is a significant sale, there are 56 lots and most are in the letting pool. Mantra don’t manage the small stuff,” Mr Ellis said.

“There’s certainly a lot of interest in Airlie Beach management rights and as COVID gets further behind us and tourism recovers things will certainly come back.”

Mr Ellis says the “six and even seven-times” earnings multiples of the Gold and Sunshine Coasts “brought tears” to his eyes as they were far beyond what was achievable at Airlie Beach. But the consolation, is what he calls “a far better return on your investment”.

“That’s the bottom line,” he said.

“A lot of buyers are attracted to South East Queensland, but North Queensland areas such as Airlie Beach will give investors a significantly better return on their business.”

Townsville-based Des Fagg, from ResortBrokers, has been selling in Airlie Beach for eight years, and says anyone who has bought management rights in the area has made a great rate of return.

He sold first-time managers Paul and Francine Tuddenham the rights to the Peninsula at Airlie Beach last year for $2.35 million.

“We had long discussions with Des, and he was terrific,” Mr Tuddenham said.

“We realised the great potential of the property. Even though Des was acting for the vendor, he was extremely helpful to us in making sure we knew everything about the property to make our start in management rights a success.”

The Peninsula sold on August 3, 2021, during a busy time for Mr Fagg, even though COVID had disrupted tourism and sales.

Management rights for the Airlie Summit Apartments sold in February last year for $1.86m and the Shingley Beach Resort went for $1 million at about the same time. Whitsunday Reflections went for $1.72m in February 2020.

“The Peninsula sold on a multiple of 4.2 while the others were in the 3s,” Mr Fagg said.

“Despite COVID the market is strong in Airlie Beach and I can’t keep up with the demand for properties.

“The location is as beautiful as anywhere in the world and when you can pick up a luxury property with multiples in the 3 and 4s, that's a pretty good return.”

At the moment Mr Fagg is marketing the Azure Sea Whitsunday Resort which offers spectacular ocean views and 30 well-appointed apartments. The management rights are on offer for $1,302,000 with a promised annual return of $325,350.

Mr Fagg is also marketing the Beach Court Holiday Villas at Cannonvale, and the Coral Cove Apartments at Bowen, properties which are both in the vicinity of Airlie Beach and which promise excellent returns.

Alex McCowan, a Director of Accom Valuers, says there are big sales happening in Airlie Beach and the multiples should get even better as trading improves with more international tourists.

“The reason people are buying there, is that Airlie Beach is a great location that provides excellent returns,” Mr McCowan said.

© Michael Evans / Adobe Stock
© Michael Evans / Adobe Stock

 

“Even during the most difficult times with COVID the properties did ok. They had terrible dips like everyone else when everything was locked up, but they came back and the state government actually put money into discounted flights that got things going again.

“During COVID, the Whitsundays drew people who might not have holidayed there before, and the owners are now getting those guests back every year because it is such a lovely place to visit.”

Mr McCowan said the sale of the Peninsula highlighted the strength of the Airlie Beach market and the opportunities it afforded.

“The Peninsula was quite a big sale. It’s another good business, in a good spot. We valued that property, and we were looking at not just what it had done recently but what it had done through the last three years.

 “We’ve been collecting three years of financials right through COVID and that gives us a really good idea on how a business is performing.

“Airlie hasn’t done too bad during the pandemic.”

 Geoff Ellis said that through the COVID years the sale of management rights in Airlie Beach had slowed, as it had done in many other areas relying on tourism. But businesses were bouncing back.

Mr Ellis has been a business broker for over 20 years, with more than half of that time selling in Airlie Beach.

“There hasn’t been a lot of people willing to sell during COVID because they know they are not going to get a fair price,” he said.

“The strength of the market right now is obviously not normal coming out of COVID, but there have been good sales recently and multiples will come back to what they were pre-COVID.

“The properties represent excellent value. I’ve sold plenty of businesses here that if they were in South East Queensland would have cost the buyer a million dollars more

“From a buyer’s point of view if you’re looking to move to Queensland from the southern states, you might as will move to where you will get the best return on investment. And if you’re looking at business fundamentals, North Queensland is the best place to be.

“There are still not a lot of places for sale and my recommendation to managers over the last couple of years has been not to go to market yet. That might sound odd coming from a broker but it’s my job to do the right thing by my clients.

“I told them ‘if you’re looking to get a fair price don’t go to market now. I actively discouraged people from going to market with the aim of getting a better price when conditions improved.”

Mr Ellis said he advised clients not to become a victim of COVID twice.

“Some management rights businesses have been under the pump with COVID, and some owners wanted to give it away at the worst possible time,” he said

“My advice was ‘look, if your health is good and you can do another 12 months stay, because I don’t want you to go to market and get a million dollars less than what your business is worth’. Thankfully tourism is opening up again now and buyers have the chance to obtain a property at a fair value which will give them excellent returns on their investment and in a beautiful location as well.”

Find the business listings in Airlie Beach details HERE.

Find more accommodation for sale HERE.

Find the latest industry news HERE


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