Flagstaff City Inn Sale to Test Market

29 March 2017

The sale of the Flagstaff City Inn Hotel in the western sector of Melbourne’s CBD will be welcomed by a market desperate for hotel properties, with Melbourne’s hotel occupancy rates at all-time highs.

The fully functioning and trading, owner-operated hotel, which generates an income of approximately $1.3 million per annum, presents as either a lucrative hotel business with scope to increase revenue, or a potentially significant redevelopment play, according to exclusive marketing agents, Savills State Director, Clinton Baxter, with Benson Zhou and Jesse Radisich.

The two level hotel occupies a generous 1,304 square metre, Mixed Use zone, site with 30 metres frontage to Dudley Street and rear lane access. It contains 42 hotel suites, a restaurant, conference facilities and 13 underground car spaces.

Located a short walk from Flagstaff Gardens, the property’s redevelopment potential is exemplified by the success of the 38 level tower development next door and the four week sell-out of a 241 apartment development directly opposite.

“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.

“The potential then for a ‘walk-in walk-out’ purchaser, who may look to further maximize returns via a refurbishment program, is extremely good, but 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,” Mr Baxter said.

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

Mr 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 very strong catchment for the hotel and likely underpin the viability of any future use, particularly residential use, of the property.

“The hotel is in a well-established and rapidly developing precinct driven by Melbourne CBD’s key educational and medical precincts, while access to public transport including Flagstaff Station, major arterial roads, and shopping and recreational amenity, are exceptional,” Mr Zhou said.

Mr Radisich said future development outcomes for the site could include high density residential and retail, commercial, student accommodation and hotel uses.

“The flexible Mixed Use zoning provides for a wide range of development options and that fact, not to mention the size of the land and the red hot hotel market, is what is so compelling about the opportunity that this property presents,” Mr Radisich said.

The property is being sold on a `walk-in, walk-out’ basis with Expressions of Interest closing Tuesday, April 11 at 2pm with offers expected above $18 million.

Learn more about Savills CBD, Metropolitan and Regional Sales services.


Key Contacts

Clinton Baxter

Clinton Baxter

State Director - VIC
CBD and Metropolitan Sales

Savills Melbourne (150 Collins Street)

+61 (0) 3 8686 8021


Benson Zhou

Benson Zhou

CBD & Metropolitan Sales

Savills Melbourne (150 Collins Street)

+61 (0) 3 8686 8099