Good time to jump on Geelong motel train

At a time when local tourism chiefs say the Geelong region is about 1000 rooms shorts of its ideal accommodation needs, it must be a good time to be in the motel sector.

The lure of a freehold motel investment with a high underlying land value has attracted plenty of interest from Geelong and Melbourne investors in the 3839sq m property at 14-16 Settlement Rd, Belmont.

The operators of the Rose Garden Motel have a lease running to 2024, with further options to 2034.

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Burgess Rawson, Melbourne agent Shaun Venables says the experienced operators have been on site for eight years.

“They’ve got 25 years experience in the business and are good operators — they run a really tight ship. The tenants are very house proud,” he says.

The tenants pay more than $109,000 a year in rent, plus outgoings. The 15-room motel has a playground, barbecue facilities, swimming pool and manager’s residence.

“One of the attractions to that property is we see it selling for $1.7 million, even the $1.8 million mark. In terms of yield on price it’s around 6.5% in the initial year,” Venables says.

Proximity to the CBD and GMHBA Stadium are benefits of the motel’s location.

But the underlying value of the landlocked 3839sqm property provides a potential future development use for the buyers.

“The underlying land value is in the nearly 4000sq m of Residential 1 land, which you might not be able to do much with in the short term, but is comforting to know you’ve got that value.

“You always want to have a plan A, B, C and D, or at least a plan B.

“Residential 1 allows for the current use, being a motel.

“You could do a residential development, high density living, you could do childcare, medical, there are a number of things you could do with the site.”

Venables says the motel serves its purpose in terms of location.

“It’s proximity to the CBD and the footy ground, the university, all the construction going on down on the way to Torquay and the tourists,” he says

“They get a lot of overseas tourists using it as a pit stop on the way to the Great Ocean Road.”

14-16 Settlement Rd, Belmont, well be auctioned at the River Room at Crown Casino, Melbourne on May 9 at 11am.

This article from the Geelong Advertiser first appeared as “Belmont freehold with underlying value is turning heads”.