Sydney tourism has suffered a setback after plans for an $800 million hotel complex in the CBD were rejected by the NSW government.
The project’s rejection comes after years of work by private developer Built and funds managed by listed property company Irongate.
The news is a blow to NSW tourism as the hospitality and travel industries try to make a recovery following the various waves of the pandemic and the recent flooding catastrophe.
Few hotels have opened in Sydney’s CBD and there has been construction halted on major projects, the Ritz-Carlton, Melbourne and W Sydney, due to the collapse of construction giant Probuild.
Another potential CBD hotel site on Bligh Street is now being sold off as a revamped office block, and before the pandemic, Aussie group Fortius and Singapore-based SC Capital contemplated pre-selling a proposed $700m hotel and office block on the property.
Built and Irongate proposed redeveloping the building at 52 Phillip Street and the adjacent property at 50 Phillip Street to create a luxury hotel mixed-use project rise.
According to The Australian, the proposal to the NSW Government was originally made by Built in 2017 and reached its second stage by October 2019. At the second stage, developers amended plans for the site that would adjoin the historic Chief Secretary’s Building.
However the proposal was quietly rejected last year, which came as a surprise after the same process allowed Crown’s casino complex at Barangaroo and Macquarie’s office towers above Martin Place metro station.
The developments proponents worked closely with the government to craft their project and gained support from former premier Gladys Berejiklian, who was vocal in her support that the hotel needed to happen to show Sydney was open to the world.
The rejected proposal has left the developers losing approximately $5m and the international investors hanging.
The Australian reported that an Investment NSW spokesperson who rejected the proposal said it did not met the required criteria.
“The proposal was assessed in accordance with the criteria set out for unsolicited proposals by the NSW government. It did not proceed past Stage 2 of the process.”
Australia’s first Kimpton Hotel opened in Sydney last month ahead of an expected national rollout of the chain, following the new owner Pro-Invest picked up the hotel from China’s Greenland Group.
The Group are also planning to launch an apartment project with a penthouse priced at over $100m.
There are currently no plans announced for the Phillip Street location by Built or Irongate after they failed to pass the three stage State Significant Development process which seeks permission for a building envelop and use.
Featured Image: Artist impression of plans by Built and Irongate for the complex