Asian owners eye hotel remake for CBD classics
Asia's wealthiest investors are hooking up with the world's most luxurious six-star hotel operators, St Regis and The Peninsula Group, to redevelop two of Sydney's most historic colonial-era buildings. Larger hotel operators such as Mandarin Oriental have also been drawn to Australia for the first time to manage the sandstone-clad Education Building once it is converted into a 250-room hotel, while smaller international boutique hoteliers such as Britain's ultra-luxe Firmdale Hotels and the international Ace Hotels group, which operates boutique properties from London to Seattle to Panama, are interested in operating a 90 to 100-room hotel in the smaller Lands Department building in Bridge Street, Sydney.
Both sandstone buildings are being offered for sale for the first time by the NSW government, as revealed by The Australian earlier this year. The buildings have more than 23,000sq m of buildable area. Registrations of interest close on December 19 through Macquarie Capital.
Tourism Australia managing director Andrew McEvoy spent last week in Asia talking to prospective hotel operators and owners.
While he would not be drawn on the identity of any potential bidders or operators, he expected most of the interested groups would be consortiums comprising an owner and long-term hotel operator, at least.
Foreign firms want to set up a luxury hotel at the Department of Lands building in Bridge Street, Sydney.
"We know there is interest from sophisticated investors in countries like Singapore, Malaysia, Hong Kong and Indonesia," Mr McEvoy said yesterday.
Asian groups were interested in developing a hotel as well as retail, restaurants and potentially apartments, he said.
Some cashed-up Asians are even talking about building a tower above the two adjacent sandstone buildings for a hotel or residential use in a bid to cash in on Sydney's apartment boom.
"A lot of people are putting up mixed-use opportunities, everyone wants it to have hotel rooms, but they are also talking about retail, restaurants, and potentially residential," he said.
"In Asia there is a lot of developments where hotel meets residential - that's an interesting proposition. The consortia are getting together and figuring out who should own it and operate it. A lot of the expressions of interest will come forward with brand names."
Southeast Asian investors have dominated hotel purchases in Australia this year. Three Marriott hotels were sold to the Malaysian conglomerate, the YTL-managed Starhill REIT, for $415 million and Singapore's Michael Kum is about to pour hundreds of millions of dollars into building a third hotel tower abutting his Four Points by Sheraton in Sydney.
"People are looking to take both properties out. They all want a good result; those buildings are so close to Circular Quay it is rarified air," Mr McEvoy said.
Mr McEvoy expected local players to register their interest in the two properties, which are leased by the NSW government.
Source: The Australian, 3 December 2013
