‘Extraordinary’ interest in Yarra Valley’s Chateau Yering

A prized heritage estate dating back to 1854 in Victoria’s Yarra Valley has Asian and American buyers aflutter about capturing a unique slice of Australian history.

Iconic to the region, Chateau Yering at 42 Melba Highway is a boutique hotel comprising 32 rooms, an exclusive restaurant and cafe plus an outdoor pool, tennis court and function facilities on 101 hectares of land adjoining the Yarra River.

The grand property comes with DA approval for additional guest rooms, a freestanding reception venue, an indoor pool with spa facilities and a wedding chapel.

There are more unusual inclusions too, including heritage-listed gardens, antique furniture and oil paintings.

With a price guide of around $20 million, it’s being offered via expressions of interest by HTL Property and Burgess Rawson, with the campaign closing at 4pm on 8 July.

Overseas interest in Aussie hotels

Managing director at HTL Property Andrew Jolliffe said Jolliffe said the interest during Chateau Yering’s first week on the market has been “extraordinary”.

“Domestic interest, which we knew, Asia-based, which we’d hoped for, but also quite a bit from the United States, which is interesting,” he said.

Alongside institutional investors, Mr Jolliffe said potential buyers also include high net work individuals and private wealth management firms.

“They look at this as being an opportunity to buy a piece of history, but also to buy a profitable business and something that they’d be proud to enjoy alignment with.”

The property is a prime tourism destination with river frontage in the heart of the Yarra Valley. Picture: realcommercial.com.au/for-sale

PropTrack economist Anne Flaherty said demand for Australian hotels is on the rise, with offshore buyers accounting for more sales than domestic buyers so far this year, according to realcommercial.com data.

“When you look at $15 million hotel sales and above in Australia, more than 50% of the buyers are actually from overseas,” she said.

Buyers are principally coming from Singapore, Hong Kong, the United States and Europe, she added, and at that level are mainly institutional investors, many with hotel management experience or relationships with hotel management firms.

‘Strong economic fundamentals’

Ms Flaherty said it’s an “opportune time to invest in hotels”.

“The tourism sector has not recovered to pre-pandemic levels yet, but because things have reopened and recovery is underway, investors have a longer-term outlook and they’re seeing a lot of positivity in the Australian hotel and leisure market.”

The data is positive. According to Tourism Research Australia, domestic tourism is forecast to return to around its pre-pandemic level in 2022-23, then surpass that previous peak in 2023-24 and enjoy moderate growth in 2025-2026.

Mr Jolliffe said Chateau Yering’s location around an hour from Melbourne’s CBD has allowed it to enjoy a post-COVID resurgence. The property produced a gross profit of $1.77 million in 2021, compared to $3.93 million in 2015, pre-COVID.

International tourism is also picking up, with the next round of forecasts due in late 2022.

But it’s not just positive tourism forecasts that are luring overseas buyers.

The DA-approved plans include an indoor swimming pool and spa facility as well as a wedding chapel and reception venue. Picture: realcommercial.com.au/for-sale

“With a growing population as well, the economic fundamentals of the Australian market are actually very strong,” Ms Flaherty said.

“First of all, we’re a very transparent market. We have very stable politics and at the moment we’re seeing globally high inflation and a high level of volatility across global stock markets. And I think that this is driving more people into commercial real estate.”

But what may also sway buyers is that the property is “known and loved”, Ms Flaherty said.

“It’s not an investment in a new hotel vineyard that no one really knows about.

“It’s not an unknown entity. It’s been around for a very long time.”

Chateau Yering has a rich history

Brothers William, Donald and James Ryrie settled in Yering, the Indigenous name for the area, in 1837. They brought with them vine cuttings, resulting in the production of Victoria’s first wine vintage in 1845.

The hotel overlooks the vineyard to this day.

The estate boasts an exclusive restaurant and cafe, with guests able to dine with a view of the expansive gardens. Picture: realcommercial.com.au/for-sale

The next owner Paul de Castella constructed the mansion and it remains largely true to the original decor and layout, with the past teasing through walls, doors, joinery and fire surrounds.

Listed on the Victorian Heritage Database, the Heritage Council says Chateau Yering is of historical significance “for its place in the history of viticulture and winemaking in Victoria” and of architectural significance “as an example of an 1860s pastoral and viticultural complex”.

Chateau Yering regularly accommodates weddings and corporate events in its indoor and outdoor function areas. Picture: realcommercial.com.au/for-sale

The estate passed through many hands before the sale to its current owner, Chinese architect Max Zhang, in 2019.

Mr Zhang has been passionate about preserving the property’s history, but now he’s pursuing other overseas interests, Mr Jolliffe said.

“He has a love and a fascination for all things ornate. The property is steeped in history and is so grand. It’s just impossible to recreate those sorts of assets. It’s a magnetic place.”