Struggling motel property owners seeking to exit the industry and sell to developers are likely to find their plans frustrated if proposed changes to the Gold Coast City Plan are enacted.

The motel sector remains highly challenged due to the ongoing impact of the Covid-19 pandemic on tourism and the rise of alternative accommodation services such as Airbnb rentals.

IBISWorld estimated revenue declined by 33.9 per cent in 2020-21 due to state border restrictions and the Federal Government’s now-defunct ban on inbound tourists from overseas.

The decline has come at the same time as development has boomed, particularly on the Gold Coast Highway between Mermaid Beach and Palm Beach with numerous projects underway or set to be launched this year.

Kollosche Commercial sales specialist Adam Grbcic said changes mooted in the Our City Our Plan Consultation Report Round 4 could severely limit the viability of motel properties as development sites.

He said while many of the amendments would benefit future growth on the Gold Coast, other proposals could have a disastrous impact, particularly on motel development sites.

They include plans to increase setbacks by between 25 and 30 per cent in the medium-density residential zone for residential dwellings, duplexes and multi-storey unit buildings.

“Some motel owners have attempted to turn to development to take advantage of the booming market,” Mr Grbcic said.

“But these changes would undoubtedly make it much more difficult for developers to deliver new housing or low to mid-rise unit developments in these precincts on smaller land blocks ranging between 405sqm and 650sqm.

“Unfortunately, development opportunities would be lost because developments cannot stack up with these setbacks in place.
“Motel property owners would lose the development upside that currently exists and is the silver lining for the struggling industry, as they would likely be unable to sell to developers for the highest and best use of the property.”

He said the rise of alternative accommodation such as Airbnb meant motels were already doing it tough before Covid-19 further impacted their profitability in 2020.

“The redevelopment of motel properties is a win-win for the Gold Coast,” he said.

“Not only does it deliver much-needed medium-density housing for the growing population, but it also offers motel property owners the chance to cash out and reinvest their money elsewhere.”

An Urbis report released in November found the southern beaches area, which runs from Mermaid Beach to Tweed Heads, had the lowest supply of new apartments on the Gold Coast with just 45 for sale.

Mr Grbcic said the other impact of the new rules would be driving up prices for the remaining development sites in the region.

“This is all while driving down supply at a time when it is much needed,” he said.