The year is 2019. Some guy in the coffee line is talking loudly on the phone about investing in toilet paper.
You are chuckling to yourself in disbelief. Poor guy, you remember thinking. Where’s the money in toilet paper?
The year is 2020. You are no longer chuckling, but you’re certainly in disbelief. The year is 2021. Coffee line guy is a multi-millionaire with his own personal barista. You are still waiting on the footpath for your overpriced flat white. Some guy is on the phone talking loudly about investing in regional pubs. Let’s hope you listened this time.
Regional pubs and remote hospitality venues across Australia have joined the growing list of unlikely-yet-profitable ventures to emerge from the pandemic. The rich are buying up big in booming regional towns that have experienced huge growth since COVID restrictions upended city life.
After a record-breaking 2021 financial year, when $1.5 billion of venues changed hands, the pub sector has gone from one of the worst hit to one of the hottest real estate markets in the country. The rush of wealthy city buyers investing in country pubs includes Merivale’s Justin Hemmes, former Mainstream Group CEO Bryam Johnston, AFR Rich Listers The Laundys, and Australian Venue Co (AVC), which is majority owned by private equity giant KKR.
Last year, Hemmes dropped an estimated $91M on a host of regional venues across the country. $40M went to a trio of venues in the small coastal town of Narooma—local fish and chip shop The Inlet, tiki cocktail bar The Quarterdeck, and 17-room boutique hotel, Whale Inn. With his other spare $51M, Hemmes acquired Byron’s infamous Cheeky Monkey bar for $13M and the 145-year-old, oceanfront Lorne Hotel in VIC for $38M.
And his shopping spree continues. Last month, Hemmes added yet another Narooma locale to his portfolio after shelling out $6M for Lynch’s hotel, one of the oldest pubs in the area. Located in Narooma’s town centre, Lynch’s Hotel is a classic country pub in one of Narooma’s most historic buildings that sits on a 2300 square metre site with a casual restaurant, indoor and outdoor dining areas and traditional hotel rooms.
Meanwhile, in central-western NSW, Byram Johnston has acquired the near 150-year-old Tarana Hotel near Lithgow. Though his primary residence is a palatial home in Palm Beach, Johnston owns a cattle farm 9kms from Tarana and insists he has no plans to bring “the Woollahra experience to the bush.”
“I’m investing in an area I know well. I know the district and the people,” he told AFR before explaining that “The Central West is a massive growth area, and hundreds of people are pouring out here on weekend drives.” He’s not wrong. Domain’s latest House Price Report revealed that median house prices in the majority of regional NSW council areas jumped 20% over the year to March, but in Lithgow, prices soared by 34.3%. Here, the median house price is up $470K from $350K last year.
In Wagga Wagga, where house prices have increased 23.8% YoY and units 43.4%, an investment group that included Rich Lister Arthur Laundy purchased the Thomas Blamey Tavern for around $27 million earlier this year.
Meanwhile, in QLD, Australian Venue Co (AVC) has secured the leaseholds of two outback pubs, the Commonwealth Hotel and the White Bull Tavern, in the remote town of Roma, 500km west of Brisbane. Owned by private equity giant KKR, AVC is focused on ‘acquiring and revitalising iconic heritage venues and landmark destinations’, with 38 venues currently in its portfolio.
Byram Johnston’s promise to keep his Eastern Suburbs taste far from Tarana’s buds mimics Hemmes’ repeated assurances in regard to his Narooma takeover, insisting he wants to maintain the authenticity and charm of the local venues and invest in the community rather than rebrand it. If he wants to warm himself to the locals, though, it might be time to trade that seaplane for a tinnie.
