Agents say unprecedented demand for development sites in suburban strips and other unique locations is contributing to a flurry of high-profile hotels being put to the market with vacant possession.
These hotels are likely to be redeveloped into residential and commercial projects.
Prominent hotelier and pharmacist Peter Rush is the latest to take advantage of the opportune environment, announcing this week plans to sell the Red Back Hotel in North Melbourne via an expression of interest campaign.
The Red Back was once owned by footballer Wayne Carey, and was the site of an infamous incident in March 2000 involving a falling window that gashed team mate Anthony Stevens.
Killen Thomas selling agent Martin Shembrey, who is marketing the property, says the recent construction of the Royal Women’s Hospital, Bio21 Institute and the Royal Children’s Hospital nearby, have increased the area’s land value, and that this is affecting the hotel’s continuing use as an entertainment venue.
"The Red Back is dead in the toilet," said Mr Shembrey. "People are crying out for medical units in the area and the Red Back is a prime development site."
Mr Rush told Capital Gain he had over more than the past six months been getting many calls from developers to buy the 1030-square-metre Flemington Road site. He said once the State Government removed poker machines from the Red Back earlier this year, the end had come for the hotel.
Other recent pub sales include the Prince Alfred, which sold for $8.1 million, and the Palace Hotel in South Melbourne, which sold for $3.7 million. Both those pubs were sold as going concerns.
Meanwhile, south of the Yarra, three developers have been shortlisted to buy the Beaumaris Hotel on Beach Road, in a deal expected to be worth more than $11 million.
Gross Waddell selling agent Joseph Carbone said developer inquiry outweighed owner-occupier inquiry for the 0.7-hectare waterfront property, which is being sold with vacant possession.
The Espy Hotel site in St Kilda remains the highest-profile hotel to pay the ultimate price for being well located. Becton demolished buildings on part of the Espy site to build a luxury high-rise apartment building.