This article is from the Australian Property Journal archive
LEFT empty for a year since the pandemic halted travel, a St Kilda Road precinct hotel site on nearly 7,000 sqm of land has been put the market as a development opportunity.
The double fronted landholding at 50-52 Queens Road on Melbourne’s city fringe is home to the five level, 203-room Bayview on the Park, and associated multideck car park.
Operations at the four star hotel were paused last year with the onsite of COVID, and the idle hotel has since been broken into and damaged, as documented on social media.
Its owner, Bayview International Hotels & Resorts – part of Malaysian group Oriental Holdings – is expecting up to $70 million for the site.
“Following a number of off-market approaches from developers, and with a strategic focus from the group to continue reinvesting into our global hotel offerings, now is the ideal time to go to market with this prominent site,” Bayview International Hotels & Resorts’ regional head of projects and product development, Derek Yan said.
JLL’s Josh Rutman, Peter Harper, Piers Jalland and Nick Macfie have been appointed to manage the transaction.
Rutman said this is the third-largest wholly owned landholding in the entire precinct.
“Whilst the prestige of the precinct has traditionally been associated with the St Kilda Road boulevard, it is in fact Queens Road that benefits from the unobstructed view lines over Albert Park towards Port Philip Bay and Melbourne CBD,” he said.
Harper said the divestment continues a trend being seen across Australia, and particularly in Melbourne, where hotels in prime locations that are nearing the end of their asset lifecycle are worth substantially more as alternative uses.
Cbus Property is moving ahead with its $300 million luxury apartment development in the CBD on the former Mercure Melbourne Treasury Gardens Hotel site, while Tim Gurner is developing the high-end St Moritz project on what used to be home to the Novotel in St Kilda.
While those sites were acquired pre-COVID, hotels have been facing heavily reduced occupancy rates as international travel to Australia has been frozen. The federal government this week extended the travel ban for another three months, now lasting until mid-June.
“In the current environment we are seeing more and more hotel owners come to us to better understand their options, as in many cases alternative uses can be incredibly lucrative and reward their original decision to invest in assets with strong underlying fundamentals,” Harper said.
“We’re currently talking to owners about not only redevelopment but also adaptive re-use for BTR, residential and student accommodation.”
A rare cleared site St Kilda Road, spanning more than 1,800 sqm at number 596, was listed for sale in August with approval for a 19 storey luxury residential development.
The high-end residential market has shown resilience during the pandemic. A record $21 million has recently been paid for a penthouse at Peter Devitt’s 409 St Kilda Road development nearby, known as The Muse. Apartments within the project have the ability to be heavily customised.
