Hyde Park hotel sale on cards as $1bn project looms
An opulent hotel development fronting Sydney’s Hyde Park is about to hit the market in a move that will help spark a larger $1 billion-plus project by the listed Dexus Property Group and billionaire Stan Perron.
They are offering the yet-to-be branded hotel component of their mixed-use development at 201 Elizabeth St to offshore buyers, while they work out how to best undertake the apartments in the proposed 50-level tower.
Up to 250 luxury units will be accommodated in a slender building above the five-star hotel and function centre. The developers may bring in a residential partner in future, although they have the capacity to undertake the entire project themselves.
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The project will replace an existing 38-level office building owned by Dexus and the Perth billionaire, and will help drive trading profits for the listed group in coming years.
It could also displace major tenants at a time when new office skyscrapers, including by Dexus, are due to completed.
Selling the hotel stratum would effectively de-risk the development as there are more than 400 rooms proposed and industry sources said these could sell for more than $1 million each.
Analysts have tipped the group will realise a premium well above the book value of the office tower.
The pair will seek expressions of interest for the hotel stratum via Michael Simpson of Savills, but he and the parties declined to comment.
The offer spells an end to a drought of five-star hotel developments in central Sydney hitting the market, since deep-pocketed Asian groups swooped on the Westin, Hilton and Sheraton on the Park more than three years ago.
Dexus and Perron won planning approval in February. Their scheme is likely to be unscathed by the broader unit market slowdown as the buyers would chase the prospect of a Hyde Park address and prices have held up in premium projects.
The move comes after earlier attempts to sell the property did not go ahead. Chinese developers, including Fosun International and Dalian Wanda pulled back due to planning uncertainty, which has now been fully resolved. Dexus said at its annual results this month that it could realise profits on the project by selling stakes and flagged that it would come online as the next residential cycle takes off.
The project will appeal to international hotel investors, as well as Asian parties, with interest also tipped from Europe and Britain as owner-operators look to get their flags into Sydney.
The project is timed to capitalise on surging demand for Sydney hotel rooms at the top end of the market. The offer follows the model set by the Collins Arch precinct in Melbourne being undertaken by Cbus Property where the five-star W Hotel pre-sold to Japan’s Daisho in 2016. Billionaire Jerry Schwartz also pre-bought the recently opened Sofitel Sydney Darling Harbour from Lendlease.
– with Lisa Allen
This article originally appeared on www.theaustralian.com.au/property.
