Ivy nightclub tipped to grow as Sydney pub king plans $1.5bn development
Pub mogul Justin Hemmes has taken the biggest bet of his career, buying a large Sydney CBD site adjoining his Ivy party palace for a multi-storey development valued at more than $1.5 billion.
For the first time, the heir to the Merivale dynasty is seeking outside investors to back the billion dollar-plus project which will top out at 55 levels and include Hemmes’s inaugural foray into the world of commercial office development.
The redevelopment of the George St site, certain to rival nearby Barangaroo’s glitzy entertainment and office precincts, will also likely include hospitality outlets, an expanded Ivy nightclub and possibly even residential apartments and hotel accommodation.
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Hemmes has recently launched more than a dozen upmarket suburban pubs, transforming ageing venues into top-class restaurants and entertainment complexes.
In a pub buying spree late last year, Hemmes, who controls about 70 pubs, hotels and restaurants, paid $21 million for the Collaroy Hotel on Sydney’s Northern Beaches, about $23 million for the Vic on the Park in Marrickville and more than $30 million for the Royal Hotel on Bondi Rd.
But his latest plan is set to transform the Sydney CBD with a giant entertainment, hospitality and office edifice that would both lift his own empire and add a spark to the city precinct that is facing off against competition from the revamp of Circular Quay, as well as harbourside Barangaroo, where James Packer’s Crown Resorts is building a $2.2 billion casino, hotel and apartment complex.
While the residential property market is staggering towards the bottom of the cycle, Hemmes’s investment play is understood to be aiming to capitalise on the surging value of commercial office towers that are trading at record levels as city rents have soared, even outpacing the strong performance of the hotel sector. Hemmes declined to comment when contacted by The Australian last night.
Sydney’s council has also been encouraging the development of new buildings that include hotels in order to attract more tourists and business travellers, with the proposed tower also a step up for the Merivale operation, potentially pitting it against international hospitality giants.
A bullish Hemmes is understood to have aggressively forked out more than $80 million for a 582sqm Westpac site in George St — about $10 million above price expectations — which adjoins the Ivy.
All up, the amalgamated site directly opposite Wynyard Station encompasses a generous 3500sqm of space for Hemmes.
The publican-cum-developer, according to sources, is also apparently considering residential apartments and accommodation for the site, with any luxury products designed to capitalise on its prime location and resilience of luxury units at the very top end of the market.
“It will be mixed use with commercial office space and perhaps accommodation and lots of hospitality,” said one senior source last night, adding that Mr Hemmes would definitely be looking for financial backers for the plans which would likely see him also expand the Ivy.
Any search would likely draw local and international developers, as well as passive investors who may seek to take an interest in the commercial element of the project.
Once completed, a new mixed-use development would eventually provide a longer term income stream for Mr Hemmes as well as diversifying his holdings beyond the hospitality sector.
Hemmes and his family have already amassed a $951 million fortune through their ownership of at least 70 pubs, hotels and restaurants after riding the property boom and turning their flair for hospitality into some of the best properties in Sydney.
The move also comes as Sydney’s George St grapples with delays on the light rail and tough lock-out laws but the prospect of the entrepreneur committing to such a major project could lift the entire precinct.
The area will also get a boost from the completion of the near $2 billion Wynyard Place development and new buildings in Martin Place being undertaken by Macquarie Group and Investa.
Hemmes’s new property fronts 312-318 George St and tenders, handled by selling agents McVay Real Estate, closed in August.
– with Lisa Allen
This article originally appeared on www.theaustralian.com.au/property.