Ex-Bank of China headquarters to make way for new Sydney hotel project
More office-to-hotel conversions are tipped for Sydney CBD as tenants leave lower-grade offices and tourism picks up.
The former Bank of China building in the Sydney CBD is set to be converted into a hotel, in another sign that office blocks are being snapped up for alternative uses.
With office vacancy levels running at their highest levels since the mid-1990s, developers are buying ageing office buildings and converting them into luxury apartments and hotels.
The Bank of China is offloading its former headquarters at 39 York St to Singapore-based Invictus Developments which has flagged plans to spend about $500m building up a local hotel portfolio.
Invictus will fork out more than $50m for the building, with industry players expecting the developer to convert the building into a hotel rather than demolish it.
Putting a boutique hotel on the site would capitalise on the surge in tourism back into Australia, and more office-to-hotel conversions are tipped as tenants leave lower-grade offices.
The move comes just weeks after developer Tim Gurner bought a trophy site in Kent St in the CBD for about $200m. He will replace the ageing office tower at 189 Kent St with a $800m 34-storey two-tower landmark on the doorstep of Barangaroo.
The bank’s exit comes as Chinese investors retreat from Australia as their home market is suffering and tourism from China has waned.
Big plays include developer Lendlease snapping up the One Circular Quay site from investment house AWH for $850m.
Others have also tried to exit. Shimao Group, controlled by Hui Wing Mao, is now planning a twin ultra-luxury tower project overlooking Sydney’s Hyde Park. But it sought a partner on the project at 175 Liverpool St, though suitors were deterred by the lofty $1bn price tag.
Invictus also bought the Quest Woolloongabba in Brisbane from the Pellicano Group for $43.8m in March this year.
Chinese developer Han’s Holdings Group, which has proposed a dramatic 80-storey twin-tower scheme in Sydney’s mid-town precinct, also weighed an exit from its $3bn project.
The former Bank of China building at 39-41 York St was left vacant by the bank which in 2016 bought a tower at 140 Sussex St from Deutsche Asset Management for $130m for its new headquarters.
At the time, China’s top banks were on the march in Australia, with the Bank of China setting up a national network across Australia.
The bank, China’s fourth largest, bought the 1965-built office in York St for $10.6m in 1992 via an informal tender. The 13-storey complex was previously known as Erskine House and its floors have a typical area of 300sq m.
JLL’s Mitch Noonan, James Aroney, Sophie Tieman and Kate Low handled the sale of the York St asset but declined to comment, as did the parties.
Invictus said last year it was targeting $500m worth of investments in hotels mainly across the east coast of Australia, after buying the five-star Harbour Rocks Hotel, in Sydney. The 59-room Harbour Rocks Hotel was sold by tycoon Bob Magid.
Invictus also bought the Quest Woolloongabba in Brisbane from the Pellicano Group for $43.8m in March this year. Sydney-based Intergen Property Group is advising Invictus Developments on its hotel plays.
Invictus principal Chayadi Karim said last December the group was committed to further investment across Australia‘s eastern seaboard, adding it was “recovering strongly from the pandemic with both local and international tourism”.
