State govt buys Fraser Suites for $105m

The Western Australian government has acquired East Perth serviced apartment tower Fraser Suites for $105 million from Frasers Property, with plans to convert the luxury hotel into social and affordable housing. 

Housing Minister John Carey announced the move today, which marks the single largest purchase of affordable and social housing in the state’s history. 

The move came following Frasers Property Australia’s exit from the Western Australian market last year, when they said they saw greater economies of scale on the east coast. 

Mr Carey said the tower will be converted into 236 short-stay serviced apartments and 11 commercial suites. 

“Our government is thinking outside the box when it comes to increasing housing options, including converting short-stay serviced apartments into long-term housing,” he said. 

“It builds on our previous decision to convert the former Murray Street Lodge in West Perth to supported accommodation.

“This is the single-biggest purchase of affordable and social housing in the State’s history, and the cost per unit is well below the cost to construct an apartment and represents exceptional value for money." 

The Singaporean-headquartered company developed the Adelaide Terrace property in 2013, and RP data shows an internal transaction within Frasers for $125 million that year. 

The government will partner with a community housing provider to manage the building, which will be contain long-term affordable and social housing rentals for low to moderate-income households.

Acting Premier Rita Saffioti said the investment represented the largest one-off acquisition of new housing for people on middle and lower incomes the state had ever seen. 

“It also represents significant value for money for WA taxpayers,” she said. 

“We’re leaving no stone unturned when it comes to boosting the supply of affordable housing, and we’ve seen significant success with measures like our incentive scheme to convert short-stay accommodation into long-term rentals, with nearly 700 homes either returned to the long-term rental market or in the process of doing so.” 

She said the transaction added to the governments $5.8 billion investment into housing and homelessness since 2021. 

Community backlash

Several nearby residents gathered outside the hotel this morning to voice their concerns about a lack of community consultation when it came to the acquisition. 

One resident told Business News that he and neighbours first learned of the sale in the media today, and were disappointed the government did not inform them ahead of the deal. 

Responding to the claim that the government blindsided nearby residents, Mr Carey told media he was bound by confidentiality.

“It was part of commercial in confidence negotiations with an international company that has its own obligations and live operations on site,” he said. 

“So respectfully, I was limited in what I could say, but at the first opportunity, which is right now, I think it settled an hour ago, [I'm] making this announcement.” 

When quizzed on the fact that news of the acquisition was in the state’s daily paper, released several hours before the minister’s announcement, Mr Carey doubled down on his earlier comments. 

“I understand that,” he said. 

“I mean, it was true, staff were telling people, but ultimately ... it was today that we could make the announcement.” 

He added that negotiations were kept behind closed doors in order not to distort the market. 

“As a matter of policy, there is not consultation before a purchase for housing. And the simple reason is this, as soon as you signal that the government is interested in purchasing a building ... the price goes up," he said. 

“So I am bound. I do want to be very clear on this, at the first opportunity that we’ve been able to tell the West Australian public and the community, we’re doing it right now.”

He added that there would be two community consultation sessions in coming weeks, which he hoped would allay some of the concerns.