Palazzo Versace snapped up by Chinese consortium

The Palazzo Versace hotel on the Gold Coast has been bought by a Chinese consortium.

Two major Chinese companies have snapped up the Palazzo Versace hotel on Queensland's Gold Coast for $68.5 million, ending months of speculation about the property's fate.

It is believed a Chinese construction house employing 10,000 staff has joined forces with a major travel company which controls at least three hotels in China, as well as several travel agencies, to sign the deal earlier today.

The 200-suite property contributed $24.8 million to Sunland's revenue in the last financial year, substantially up on the $14.7m contributed in the 2011 financial year, according to the listed developer's financial statements released to the Australian Stock Exchange yesterday.

The deal is still subject to FIRB approval, as well as approval from the House of Versace. It is also subject to finance.

The sale price reflects the approximate book value of the hotel while the sale proceeds would be used to repay the hotel's borrowings of $27.4m.

Settlement of the sale, foreshadowed by The Australian earlier this year, is anticipated on November 30.

Wealthy Chinese investors are continuing to buy up Australia's hotels and resorts, given leisure arrivals from China continue to grow at record levels, no doubt encouraged by a new Tourism Australia campaign released in Shanghai in June.

Australian Bureau of Statistics figures show Chinese arrivals rose a record 19.4 per cent in June and 16.7 per cent for the financial year, to 583,200.

The figures cement China's position as Australia's third-largest inbound market in terms of arrivals. China is closing in on the 597,000 arrivals from Britain, Australia's second-biggest market.

Chinese, Singaporean and Malaysian investors have been targeting Australian hotels and resorts all year.

In April, Chinese cable TV magnate, William Han, paid about $12m for Lindeman Island. Mr Han plans to spend two years formulating his redevelopment plans for the island off Queensland's Airlie Beach. He will use his cable TV golf channel to market the property to Chinese holiday-makers.

Mr Han told The Australian earlier this year that it could take him up to two years to work out how to redevelop the resort island, which until earlier this year was controlled by Club Med. Mr Han is also known to have inspected the Palazzo Versace but decided against proceeding with an acquisition.

Another Chinese group, Nanjing-based Fullshare, is also developing Whisper Bay resort near Airlie Beach, which is being billed as an up-market resort.

Sunland's chairman Soheil Abedian declined to comment on the sale of the Palazzo Versace. Built in 2000, the hotel was the first in what was planned to be a succession of Versace-branded hotels. A second was developed in Dubai.

About $80m was initially expected for the Palazzo Versace Gold Coast property, which Sunland Group sold because it wants to concentrate on residential property development on the east coast.

Sunland closed down 3.5c at 88.5c.

Source: The Australian, 21 September 2012