With the impending overseas relocation of its current owner, a 20-room backpackers’ hostel on the immediate fringe of Wellington’s CBD is up for sale, with tenders being called on the freehold land, building and business as one package.
Trading as Rosemere Backpackers, the property and business at 6 MacDonald Crescent, Te Aro, was purchased as a going-concern by the vendor in 2001, and the hostel has catered to the budget traveller since then.
Located around 50 metres from Willis Street and virtually on the CBD’s doorstep, the property has convenience and position firmly on its side.
Zoned Inner Residential, the building offers 600sqm of floor area over three levels, with reception area, kitchen, common room and laundry facilities on the ground floor and sleeping accommodation above. It occupies a compact, corner 306sqm site.
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With established city backpacker accommodation options in the capital diminishing as progressive development takes place, and inner city land at a premium, agents say the property needs an energetic and visionary new owner to unlock the true value of the site.
Fraser Press and Bhakti Mistry of Bayleys Commercial Wellington are marketing the fully-operational property and the going-concern business, with tenders closing 4pm, 11th March.
“Quite bluntly, this property requires significant upgrade and the current owner feels that the necessary major work is now best left to a new owner who will see the property and its potential through fresh eyes,” says Press.
“The building is on the Wellington City Council’s earthquake-prone register and is yellow-stickered under Section 124 of the Building Act.
“The owner of the property is required to address this status by 2027 or provide evidence it has a new building standard of higher than 34 percent.”
This requirement will transfer to a new owner.
While the property dates back to the early-1900s, there is no heritage overlay or protection on the timber building which has had a series of alterations and additions made to it over the ensuing years.
In its current guise, the property operates as a 60-72 bed hostel with various room configurations and communal amenities.
It services the budget end of the traveller market with nightly rates ranging from $25 for dormitory accommodation to $86 for a private double or twin room.
Mistry explains that there is proven demand for affordable backpacker beds in the city however, the options for short-stay travellers are shrinking as other accommodation models evolve.
“This backpackers’ hostel is cashflow-positive, has demonstrated viable occupancy and still has ‘legs’,” she says.
“It’s one of only a handful of hostels in the city now, and with the recent closure of Wild Zebra Backpackers which was purchased by developers for the creation of medium-long-term self-contained accommodation, a new owner may well wish to take advantage of the growing gap in the market.
“That said, there is obvious deferred maintenance work to be done on the property and a complete refurbishment would certainly elevate its appeal in the backpacker market.”
The property and business is for sale with no fixed leases and can be available with vacant possession.
Press says when viewed through an investment and return-on-asset lens, the property’s future “best and highest use” would undoubtedly be realised through redevelopment.
“Whether this takes the form of a complete restrengthening and refurbishment programme to the existing structure to bring it up to today’s building code, bowling it to build a slick city townhouse for a private individual, or a higher-density residential project – the scope is broad,” he says.
“The surrounding neighbourhood is eclectic and punctuated by some smart apartment complexes and empathetically-restored villas, so imaginations will come into play.”
This fringe CBD property is in close proximity to Victoria University, major national business offices, and the shopping centre of the city.
A comprehensive chattels list is available to interested parties and business accounts will be made available to serious prospective upon request in the coming weeks.
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