The influence of our furry friends on commercial investments is becoming greater by the day. Only a few months ago we detailed the impact Australia’s pet obsession was having on the healthcare sector with vet clinics expanding their footprints to cater to demand for grooming, training and boarding, and supermarket giant Woolworths snapping up the Petstock store chain for $600 million plus rival retailer Pet Supplies.
Now pet resorts are the flavour of the month. Investors and owner-operators are hankering after the assets simply because, as one agent put it, “they’ve become ridiculously profitable”. Commercial business brokers report high demand and say they cannot get enough on their books, while Ray White Capital, one of the country’s largest real estate companies, is aiming to raise $40 million for a fund that will eventually comprise over a dozen up-scale pet resorts and deliver forecast annual dividends of between 6% and 8%.
Pampering plus
Premium animal boarding and pet resorts have been on the rise for over a decade. Yet their popularity boomed post-covid – and not only due to the resumption of travel. Pet owners’ desires for their four-legged friends to be as happy and well-looked after as possible has driven the move toward upscale pet resorts, operators adding plush accommodations, splash pools, lavish playgrounds, commando-style courses, grooming facilities, full veterinary services and premium food. Stays are curated to stick close to the pet’s regular routine, while Queensland operator Townsville Pet Resort has gone so far as to build Hamptons-style villas for dogs complete with proper beds and a “state-of-the-art” cattery.
Ray White Capital’s chief executive George Ajaka attributes the uptick in owners seeking luxury experiences for pets – and their willingness to pay royally for it - to the rise in pet ownership during the pandemic.
“Ultimately the ship has been growing in the last decade,” Mr Ajaka said. “But Covid has really supercharged pet ownership.
“People will spoil their pets rotten, but they won’t spoil their children rotten.”
Buyers on the hunt
Agent Serge Tsundra from VIC Business Brokers is seeing the evidence firsthand. “Before covid this market was fairly flat,” Mr Tsundra said. “Now I’ve sold three pet resorts in the last two years, and I’ve currently got four on the market. Also, before covid, you’d get one buyer. Now there are a lot of purchasers. The last one I sold in the Yarra Valley ranges had three vying for it.”
He also agreed the market’s activity was largely driven by a desire for pets to have a “specialised place where it’s like they are on vacation”.
Mr Tsundra said that like RWC he was seeing smaller private investors joining forces to buy multiple premium pet resorts for investment funds. “It’s important that pet resorts are set up properly,” he said. “Investors are looking for growth and dividends.”
Growing industry
Growing demand for premium pet care services is a worldwide phenomenon. US firm Future Market Insights estimates the pet hotel market globally to grow by 8.4% per annum till 2032, sending its value up from around $4 billion to well over $9 billion. The Pet Hotels Market Size, Industry Share & Trends 2022-2032 report credits pet owners becoming “more conscious and sentimental” about their animals and wanting them to have the best care possible from food to vet care to play while they themselves take a break.
As for Australia, the average household now has more pets than children. RWC research found two groups dominant among pet owners: downsizers or empty nesters who bought an animal or two when their children left home, and younger people aged between 20 and 40 years who were either delaying marriage and childbirth, or deciding not to have children altogether, and filling the space with pets.