EXCLUSIVE: Melbourne coronavirus outbreak hotel to be put up for sale

EXCLUSIVE: One of the hotels at the centre of Melbourne’s coronavirus outbreak is being put up for sale.

Carlton’s Rydges on Swanston, which hit the headlines in recent weeks after it emerged dozens of COVID-19 cases stemmed from guests and security guards breaching quarantine conditions at the hotel, will be put on the market later this month while the city remains in lockdown.

The Victorian Government has come under fire for its handling of hotel quarantine, with reports security contractors allowed locked-down guests to move between rooms and leave the hotels, while the Herald Sun claimed some guards shared lifts and common areas with guests and even slept with them.

The Rydges hotel was listed for sale in May last year with price expectations of more than $40 million, but a deal could not be finalised.

It will now be put on the market again amid the pandemic that saw Melbourne locked down for six weeks on Thursday – the second time Melburnians have been ordered to stay at home.

Jones Real Estate director Paul Jones, who is marketing the hotel with Sam Guest and Tim Spargo, in conjunction with Colliers International’s Oliver Hay and Guy Wells, says the property is being pitched predominantly as a development site, though it could potentially remain as accommodation.

The hotel, which is privately owned, will be sold with vacant possession, offering the buyer the chance to take over the hotel’s operation, lease it out, or develop the site.

The Rydges Carlton hotel has a prime parkside position.

The hotel comprises 107 rooms and has the potential for an operator to generate net income of around $3 million per year, Jones says.

“It has very good existing improvements, but whilst it is a hotel, we’re thinking of the buyer as a developer,” he says.

“A developer might want to do a minor refurbishment and rent the property out for the initial term, but it is a development site. It’s Capital City zoning with circa 55 metres of development upside, subject to council approvals.”

Buyers will not be able to inspect the property in person during the campaign, which begins on Friday, July 17.

Jones says the hotel’s links to COVID-19, as well as the current Melbourne lockdown, are unlikely to impact its sale potential.

“Hoteliers had a decision to make, shut up shop or help people in need. The vendor and the staff of the Rydges put themselves in the front line to assist the community during the current pandemic,” he says.

“Ultimately we think a developer is the logical buyer … and we expect student accommodation, office and residential developers to have a red hot crack at it,” he says, adding that it may also appeal as a medical, aged care, retirement care or education development.

“It’s located opposite the park with uninterrupted views of Melbourne city skyline.”

“It used to be the tallest building in the street. Now it’s probably the shortest and there’s been a lot of development interest in that precinct of Melbourne over the past month.”

“There’s not much on the market at the moment and we expect buyers to compete.”