KEY POINTS:
Overseas investors frustrated about not being able to buy Auckland hotels are now keen to develop new buildings rather than buy existing properties.
Consultants Jones Lang LaSalle's latest hotel investor sentiment survey found investors were now less interested in existing buildings but more enthusiastic about developing.
Investors saw
Auckland, Bangalore, Macao, Ho Chi Minh City and New Delhi as the best places to build a new hotel, it found. Last year, they saw Beijing, Bali and Auckland as the best places to buy hotels.
"Having topped the list for markets to buy in our last survey, Auckland now features as the only mature market in which investors want to build," the survey found.
Every six months, the survey asks the world's top 2000 owners and investors about the best and worst places to go. Dean Humphries, hotel representative for JLL in New Zealand, said that while investors wanted to build in Auckland, high land prices and low room rates made development virtually impossible.
"It doesn't make any sense to build, and hotels run the risk of going broke," Humphries said. But selling rooms to investors helped with funding and could enable development.
The Holiday Inn, the first new hotel in Wellington for 12 years, opened last week after a construction period of more than two years. The 280-room, 17-level hotel was developed by Nigel McKenna's Melview Developments and Intercontinental Hotels Group, which has also worked on two new Auckland hotels: the Quadrant opened late last year and The Westin, on the waterfront, is almost finished.
Fletcher Construction built the Intercontinental and the Westin.
Some Auckland office blocks that have recently lost their anchor tenants could be converted into hotels.
Speculation continues over new uses for the former Simpson Grierson office block on Albert St after the lawyers left 10,000sq m vacant. A hotel conversion is a possibility for the building in the centre of the city's hotel precinct - Sky City's two hotels and the Crowne Plaza are all nearby.
Downtown House, alongside Westfield's Downtown shopping centre on Queen Elizabeth II Square, also could be ideal as a hotel, now that its anchor tenant, Air New Zealand, has shifted into its new headquarters, leaving floors empty.
The building sits at the heart of Auckland's transport infrastructure around the Britomart precinct and near the harbour, making it ideal for a hotel.
Room at the inn
* Foreign interest in New Zealand hotels remains strong.
* Building rather than buying is the favoured option.
* Wellington's new Intercontinental opened this month.
* Auckland's new 121-room Westin opens this winter.
* Auckland office blocks could soon become hotels.