The Motel Market – Update The Motel Market – Update The Motel market in Australia, like all real estate, suffered through 2008 and 2009 due to the Global Financial Crisis, with a softening in yields as a result. Transaction volumes have decreased since the highs of 2006/2007 due to both restrictive bank lending practices and the lack of buyer interest. This decline was on the back of a market reflecting reduced tariffs and occupancies. The longevity of the resources boom has been brought into question by mining companies as the relatively high cost of doing business in Australia impacts on project viability. As a result, projects have been deferred and in some cases, shelved. The flow-on effects from this slowdown remain uncertain, though it is expected that ancillary services associated with the resources industry will be impacted to some extent. This has created uncertainty within the Motel market. Investment buyers remain particularly focused on tenant quality and length of lease terms and are highly yield driven, generally seeking a ‘secondary’ yield with a ‘prime’ yield profile. Although occupancy rates in regional and rural areas, unsupported by infrastructure and mining projects (or where mining projects are being curbed or put on hold), have generally suffered, transactions of Motels have been strong due to the prevalence of mining, CSG and infrastructure activities. Corporate demand for out of city Motel accommodation has declined in 2013, however the receding Australian dollar may well see more local tourists holiday domestically. Further, international tourists may also see benefit from the present competitive exchange rates, therefore potentially increasing visitor/tourist numbers. However the easing of the official cash rate by the Reserve Bank of Australia appears to...