Melbourne's Flagstaff City Inn expected to fetch upwards of $18 million: Savills

A fully-functioning, owner-operated hotel in the western sector of Melbourne’s CBD has been listed for sale, a welcome move in a market desperate for hotel properties as the city’s hotel occupancy rates hits all-time highs, according to Savills.

Flagstaff City Inn Hotel at 45 Dudley Street is on the market with expectations of more than $18 million. 

The property is being sold on a ‘walk-in, walk-out’ basis with expressions of interest closing April 11.

The hotel makes an income of nearly $1.3 million per annum, and presents the new owner as either a running lucrative hotel business or one with redevelopment play, according to Savills agents Clinton Baxter, Benson Zhou and Jesse Radisich, who are marketing the property.

The two-level hotel contains 42 hotel suites, a restaurant and conference facilities. It occupies 1,304 sqm and is a mixed-use zone.

Located a short walk from Flagstaff Gardens, the property has strong redevelopment potential, judging from the success of a 38-level tower development next door.

"This property has extraordinary potential as an already strongly trading going concern in a hotel market which is in the midst of a severe shortage of stock and a consequent spike in occupancy and room rates,” said Baxter.

"The property‘s potential for redevelopment is perhaps even more exciting given the zoning and the resounding success of other development ventures in this precinct.’’

The record tourism driven hotel sector has seen occupancy rates of near 90 per cent in Melbourne and, with forecasts of further growth in tourism, any investment opportunities which come to the market are much sought after, according to Savills.

Zhou said the hotel’s close proximity to Melbourne University and Australia’s largest medical precinct, RMIT and the new Halleybury College Campus, would continue to provide a strong catchment for the hotel and likely underpin the viability of any future use, particularly residential use, of the property.

Future development for the site could include high density residential and retail, commercial, student accommodation and hotel uses, added Radisich.