This article is from the Australian Property Journal archive
EXCLUSIVE: Property investor and developer Sterling Global has surprised the market by shelving its grand plan to build a luxury $520 million mixed-use hotel project on a high-profile Melbourne CBD site, Australian Property Journal can reveal.
- What Property developer Sterling Global has abandoned plans for luxury hotel
- Why Despite tourism boom developers facing challenges to deliver hotels
- What next The hotel will be replaced with residential apartments
Sterling Global lodged new plans with the Department of Transport and Planning to overhaul its proposed project in 623 Collins Street, on the corner of Spencer Street, diagonally opposite Southern Cross Station.
The site was once owned by pub baron Bruce Mathieson for decades with Sterling Global acquiring the land in 2023.
Set on a 1,973 sqm site, the property is anchored by the heritage-listed 1920s-built former State Savings Bank building.
Following the acquisition, Sterling Global immediately lodged a development application to develop a $420 million 42-storey tower which would include 175 one-, two- and three-bedroom residences, eight sub-penthouses and penthouses, in addition to an upmarket luxury 229-room hotel.
At the time, Sterling Global hailed the transaction as the group’s “first hotel acquisition”.
The group’s planning application was approved in May last year with a revised end value of $520 million but last month, Sterling Global lodged an amendment to remove the hotel component from the approved scheme and replace it entirely with apartments, along with commercial tenancies, restaurant and café on the ground floor.
The amended mixed-use residential development will comprise a total of 283 apartments, up from the original 175 apartments.
Australian Property Journal reached out to Sterling Global, however the company was unavailable.
Sterling Global’s change of heart has surprised the market given the strength of Melbourne’s hotel sector and conversely the challenges in the apartments market.
STR research revealed Melbourne posted its highest average daily rate of $221.36 and revenue per available room of $166.61 in the year to October 2024, up 4.2% and 8.9% respectively.
The city’s highest daily occupancy levels were seen on Tuesday and Wednesday, 22-23 October, at 86.8% and 88.9%, respectively.
As a result, Melbourne recorded more new hotels opening between 2019 and 2024 than any other Australian city with more than 5,000 rooms added, an increase of 21% since 2019.
JLL research found the opening of 22 new hotels coincided with a 9% rise in hotel bookings.
Recently Singapore-listed owner Tuan Sing lodged plans to redevelop the landmark 550-room Grand Hyatt hotel.
On the other hand, the apartment market continues to face challenges with the future of Melbourne’s $2.7 billion project in doubt after Malaysia-backed developer Beulah put project manager BSSPV into voluntary administration.
The new year kicked off on a low note for the industry with developer Bensons Property Group, which has $1.5 billion worth of projects, entering voluntary administration, just a fortnight after Chinese-backed Melbourne-based developer APH Holding went into administration.
Although the hotel sector is not immune either, but the Melbourne Place hotel sold last month for around $150 million.
