If You Build It, They Will Come
Far East Consortium expects its Western Australian activities to provide a welcome boost to the state's tourism and education sectors, as the development giant progresses up to five inner-city projects highlighted by its $500 million Ritz-Carlton build at Elizabeth Quay.
After having operated in Australia since the early 1990s, Hong Kong-headquartered Far East Consortium made a grand entrance to the Perth property market in 2014, when it announced it was bringing the ultra-luxurious Ritz-Carlton hotel chain to Elizabeth Quay.
Along with the Ritz-Carlton, and its two associated luxury apartment towers, Far East Consortium was more recently been selected by the state government to develop five lots at Perth City Link.
Plans are in motion to develop a Dorsett Hotel, several apartment towers and a student accommodation project at the City Link land, with the company taking a precinct approach to the projects.
The developments, part of an international pipeline worth $HK47.2 billion ($7.98 billion), are in line with Far East Consortium's overarching strategy of “targeting Chinese wallets” in each of the regions it operates in globally.
Far East Consortium WA manager Dan Sweet told Australia China Business Review that reintroducing the Ritz-Carlton brand to Australia after a 15-year absence was a coup for Perth, and that the project would emerge as a key attraction for Chinese travellers.
“Ritz-Carlton has got great brand awareness in China, particularly southern China and Hong Kong, so we thought it was a great opportunity to be the catalyst for inbound Chinese tourism, which as a group we try to capture and be a part of,” Mr Sweet said.
“Chinese travellers are brand loyal and, if they feel comfortable and familiar, they will stay there.
“With the Ritz-Carlton for instance, they have extreme brand loyalty. Someone may choose to go to Perth because they see it's got a new Ritz-Carlton, rather than stay at the Ritz-Carlton because they are going to Perth.
“That's really interesting, you've got these Ritz-Carlton junkies that will travel around the world, purely staying and holidaying in locations where there is a new Ritz-Carlton.”
Far East Consortium had originally planned to build and sell the Perth Ritz-Carlton, appointing commercial agency JLL to run an international sales campaign in late 2016.
While the campaign attracted several offers, Mr Sweet said the group decided to keep the hotel in its portfolio, which includes three other Ritz-Carlton properties either under construction or in the planning process in Melbourne, Sydney and Brisbane.
Mr Sweet said the retention of the Perth Ritz-Carlton, alongside the development of the Dorsett property at Perth City Link, was a show of confidence in the fundamentals of not only the WA property market, but also the potential of its tourism sector.
“We see Perth becoming a really popular location and having points of difference, and a great product to offer,” Mr Sweet said.
“We want to invest our money wisely to capture some of that, but obviously it's super important that government continues to market and advertise and support people like Far East and BGC, who have built The Westin.
“People who are building hotels in Perth believe in what Perth has to offer, but government really needs to be effective in the way they market WA, because in China it's all about Sydney and Melbourne.
“If Perth is going to be successful, then we really need to get out there and push that message.”
The student accommodation component of Far East Consortium's City Link developments is also designed to lift Perth's profile in the international education sector.
Over the five lots it has been selected to develop, Far East Consortium is planning to build between 700 and 1,000 apartments and retail amenities, including a supermarket and several hospitality offerings.
Those developments will be alongside a 550-bed student accommodation facility, which Far East Consortium is developing in partnership with Brisbane-based Cedar Pacific.
Student accommodation is an emerging asset class in Perth property, as developers seek to fill a gap in WA's international education market by creating inner-city properties where students prefer to stay.
Local developer Stirling Capital is building a 571-bed, 24-storey student tower on Stirling Street, near Gaw Capital Partners' 500-bed repurposing of the former Telstra headquarters into student housing.
Another student accommodation tower has been approved to be built on Wellington Street, a 713-bed, 30-storey proposal by listed investment company Blue Sky.
Curtin University is also planning to construct up to 1,000 new student beds at its Bentley campus, further diversifying the upcoming options for student housing.
Mr Sweet said despite the looming competition, student accommodation at City Link would be a vibrant addition to the upcoming precinct.
“We saw the opportunity there to build something, own it and run it,” he said.
“It will activate the restaurants and the bars and the cafes, but also it's an emerging asset class in Perth.
“If I'm frank, we're a long way behind Sydney and Melbourne in terms of international students but it's something we see increasing and something that we'd like to foster.
“In terms of it being an emerging area in Perth, it's also untested, so it's a little bit scary, but we think by having a hotel next door, apartments, restaurants and cafes, it will be a very safe and vibrant area for students to live, so it just makes sense to us to add it into the mix.
“Also, Far East Consortium has got a really healthy balance sheet so we're able to do these things and take a risk where we see a return and an opportunity.”