Queenstown is in desperate need of new visitor accommodation and the response to date is well short of demand, according to Colliers International.
The resort needs 300 new rooms every year to meet projected increasing demand and despite new hotels in the pipeline the expected supply was not enough, said Colliers in its 2017 Queenstown property market review and outlook report.
Booming tourism had led to visitor accommodation being priced at a premium as existing hotel, motel and budget accommodation options struggled to accommodate the growing visitor numbers.
Annual visitor guest nights hit 3.5m over the year to March 2017, representing 5.2% growth compared with the previous year. Visitors spent a total of $2.1bn in Queenstown in the year to March 2017, a 7% increase over the previous year.
“Visitor accommodation tariffs have increased significantly on the back of this demand, with hotel room rates lifting by 15% over the year to March 2017 compared with the previous year,” said Colliers.
“Queenstown is in desperate need of new visitor accommodation supply in the form of hotel and motel rooms.”
The Ramada Hotel in Remarkables Park opened a year ago, bringing 59 furnished units to the market, while two further similar-sized developments are currently under construction in the town centre. A 227-room Holiday Inn Express is also planned but this response was “well short of market demand”, said Colliers.
Occupancy rates have averaged approximately 70% over the past year with private owners making houses and apartments available for short stay accommodation through services such as Airbnb.
The rapid pace of tourism growth was giving developers the confidence to press ahead with key commercial and residential projects but it was also creating rising demand for property and putting stress on the resort’s infrastructure as more people moved to the town for employment.
“The tourism boom has cast the spotlight on the major deficiencies of Queenstown’s infrastructure,” said Colliers International’s Queenstown valuation director, John Scobie, at the launch of the market report on Friday.
“While central and local government investment into infrastructure has increased, there is a critical balance that needs to be addressed. We want to attract more tourists and residents, but making sure our infrastructure, accessibility and housing market can cope with this unprecedented growth is a key priority.”
Scobie said Queenstown’s property market was at a cyclical peak driven by tourism and population growth and the medium-term outlook was still very positive.
“Queenstown is traditionally a volatile real estate market of peaks and troughs every eight-to-ten years,” said Scobie.
“The resort town has now matured with a growing permanent population, often driven by a lifestyle choice and perceived good employment opportunities. This is underpinned by a strong tourism dynamic which is boosting businesses and support industries.”
Colliers expected property values in Queenstown to remain at high levels in the short to medium term, mostly due to ongoing tourism growth, infrastructure development, economic growth and construction.