As summer holidaymakers check in to South Island motels and holiday parks, they’re driving a significant resurgence in the accommodation sector that’s attracting renewed investor confidence after several challenging years.
Michael Lough, Investment Sales Broker at Colliers Christchurch, has specialised in accommodation assets for over seven years and reports a marked increase in investor confidence and transaction activity in the past three to six months.
“From the tourism perspective, international visitor numbers are rising. We’re back towards pre-pandemic levels in terms of arrivals and investor sentiment has strengthened,” Lough says.
There were 22,500 more overseas visitors in October last year, up 9 per cent from October 2024, according to Stats NZ.
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“Accommodation occupancy rates are high and steady with solid forward bookings entering the summer season.
“Interest rates have lowered and there is increased appetite to purchase accommodation assets and capitalise on the return of wealthy overseas tourists.”
The South Island’s dramatic landscapes, adventure activities, and natural attractions are a drawcard for visitors and Tourism New Zealand data shows extended stays and elevated per-trip spending from guests drawn to outdoor pursuits.
This tourism renaissance is delivering tangible results for accommodation vendors across multiple price points and locations.
Lough’s investment sales from the past year include $18 million worth of accommodation assets, with individual properties ranging from $1 million to $5 million each.
He points to strong activity in Timaru, Geraldine, and Christchurch, with properties changing hands that demonstrate robust market demand.
One notable transaction at auction in Rangiora attracted seven interested parties, ultimately selling for $300,000 above expectations – a clear indicator of competitive buyer interest.
The former Lilybrook Motel at 60 Percival Street exemplifies the type of opportunity attracting buyers.
The property, a 14-unit motel complex on 1,800sq m of high-density residential-zoned land, was offered ‘as is, where is’ in October and sold for $1.28 million to buyers who will be renovating and reopening.
More telling is the movement in listings that sat dormant for years.
For example, there’s been interest from multiple parties in the prime tourism site at 85 D'Archiac Drive in Tekapo, marketed for over two years during the post-pandemic uncertainty. Now it’s attracting serious attention.
The 1.89ha vacant development site, zoned for commercial visitor accommodation with stunning lake views, represents a potential development valued at up to $200 million.
“It’s a world-class site and we’ve seen a strong increase in interest in the last two months,” Lough says.
The renewed interest in high-end development sites matches buoyancy in regional assets.
The Westport Kiwi Holiday Park & Motels at 31-37 Domett Street recently sold unconditionally after three years on the market.
The substantial 5.43ha property, featuring a mix of accommodation from chalets to powered tent sites, had generated steady inquiries but struggled to close a sale until now.
“There’s a clear difference in the market,” Lough says.
The buyers had looked at the business previously and were now ready to commit.
Financial returns aren’t the only drawcard.
Lough says many buyers are owner-operators seeking a lifestyle change and looking to run their own business.
“Motels offer an entry into a business with proven results and an existing track record to build on.”
Freehold ownership often clinches the deal because many accommodation properties sit on substantial landholdings of 2,000sq m to 3,000sq m or more, often in prominent locations.
“Freehold ownership is a key driver. Buyers acquire both the immediate income stream and an underlying land asset with future development potential.”
The pipeline includes premium assets like Hotel Lake Brunner, set lakeside in the town of Moana on the West Coast with panoramic views.
The proprietors love the place but it’s time for new ownership to take the hotel to the next level, so they are selling the restaurant, bar, and 20 accommodation units sitting on 8,115sq m of land.
The hotel comes with development-ready concept plans for more rooms – the kind of turnkey opportunity now attracting serious interest.
As tourism continues its recovery trajectory, Lough says the accommodation sector appears well positioned for sustained growth, with buyers more optimistic about entering or expanding in the market.
- Supplied by Colliers
