Sky-high pricing as Shangri-La Melbourne hits the market
The Malaysian developer of the high-rise Shangri-La Melbourne has put the under-construction 500-room hotel on the market with an asking price of around $500 million.
The per-room price of $1 million, if achieved, would set a record for the city at a time when the performance of major CBD hotels, while improving, is still a long way short of pre-pandemic highs.
But SP Setia is undeterred and has decided to test the market for the luxury property, one half of the twin-tower development it is building at 308 Exhibition Street on the northern city fringe near Carlton Gardens.
Agent Gus Moors from Colliers said the 60-level hotel was due for completion in early 2024 and that he expected a mix of international and domestic interest in the asset.
“I think there is a fresh injection of capital looking at the sector,” Mr Moors said.
“We saw in 2021 the domestic investor profile was stronger than it’s been for a long time, but that the equity might have come from offshore, and we think that will continue.
“We see that pricing continues to hold up well on the assets that have been brought to market and transacting.
“There hasn’t been significant discounting throughout the pandemic and that plays to the fact that investors see good long-term fundamentals underpinning the sector.”
Key markets needed
Last month, ASX-listed operator Event Hospitality & Entertainment said no substantial recovery would occur until regular travel resumed from the key tourism markets of New Zealand and China.
In a sign of that weakness, not all hotels put up for sale over the past 12 months have sold, with the Action Hotels portfolio, Rydges Sydney Airport and Rydges North Sydney all withdrawn because bids did not meet the asking price.
Separately in Melbourne, Singaporean company Well Smart Investment Holdings is selling the 35-storey Novotel and ibis Melbourne Central tower with a price guide of $180 million.
Part of an asset recycling program by Well Smart, it follows the sale of the ibis Budget Melbourne CBD and Mantra Terrace Hotel in Brisbane. The property is being offered on a three-year sale and leaseback.
A Well Smart spokesperson said the proceeds will be used to fund a hotel and residential development at Airlie Beach, north Queensland, and multiple projects in Queenstown, New Zealand.
Meanwhile, plans have been revealed for the redevelopment of the Sydney’s Hyde Park Inn and an adjacent three-level office building, sold to Central Element for $95 million in late 2020.
The properties are being transformed into 53 luxury apartments plus retail at 271 Elizabeth Street, based on a design by architects Glenn Murcutt and Angelo Candalepas.
