HOW COMMERCIAL REAL ESTATE IS RESETTING — AND WHAT IT MEANS FOR YOU
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Sydney developer Icon Oceania has listed Sydney’s newest CBD hotel, set to open next month, for north of $100 million.
The 145-key Vibe Darling Harbour, operated under a management agreement with TFE Hotels, is located at 319-32 Sussex Street in Sydney’s Chinatown. The site was picked up by the developer for $21.35 million in 2016.
TFE came on board early on, with the duo winning approval for a hotel scheme in 2017 — selecting architecture firm WMK after conducting a design competition for the site.
The listing comes the same week as news of the Yeh family’s acquisition of the strata-titled Seasons Harbour Plaza at 252 Sussex Street.
While the pub market has been busy in comparison, restricted stock in Sydney’s hotel market has kept a lid on transaction activity.
“There were many hotel transactions in Sydney between 2013 and 2016, however since then there has been very limited opportunity to acquire a Sydney hotel,” JLL chief executive of hotels Craig Collins said.
Transaction activity in Sydney’s hotel market is at its lowest volumes in the last five years, with a lack of institutional-quality stock in the city leaving investors with few acquisition options.
“With incumbent owners typically adopting a ‘hold’ strategy and reluctant to divest assets, transactional activity will likely be focused around development projects,” Collins said.
As well as the 4.5-star Vibe Hotel, the Meriton Suites at 230 Sussex Street has added 202 rooms to market this year, while the Sydney Hotel QVB has added 90.
In 2020, the 152-key Crowne Plaza, the 590-key W Hotel, the 121-key Porter House and the 194-key Adina will all come to market at the southern end of the CBD.
TFE Hotels executive development manager Michael Herman said that TFE is receiving more enquiry from traditional residential developers.
Speaking at The Urban Developer’s hotel summit in Sydney in June, Herman said that 95 per cent of the group’s portfolio is in capital cities.
“We have 10 hotels under construction, so the next 12 to 18 months is going to be very busy opening these properties, starting with the Vibe Darling Harbour at the end of September.”
Expressions of interest for the Vibe Hotel Darling Harbour close 12 September.
