Pro-invest buys Southbank site
Hotel developer and operator Pro-invest has paid $25 million for a 1,704 square metre development site on City Road in Southbank, Melbourne, where it will build its fourth Holiday Inn Express as part of its master development agreement with InterContinental Hotels Group.
The site at 35-47 City Road was sold by CBRE, after Opera Australia, which uses premises as a performance rehearsal studio, and a private investor who owned the adjoining building at 43-47 City Road combined their properties amid high demand for city fringe sites.
It was the first major development site sale since Victorian Planning Minister Dick Wynne brought in new rules capping plot ratios to a density of 24 to 1 in September, without warning.
Pro-invest managing director Tim Sherlock said the recent plot ratio restrictions had worked in their favour by making the site harder to stack up for residential development.
“The new rules help us because hotel rooms are smaller than apartments so we don’t have the same density requirements as residential competitors, some of whom are seeking approvals as high as 60 levels on other Southbank sites,” Mr Sherlock said.
Pro-invest will seek a permit for about 300 hotel rooms across a 20 level development. “Capping the maximum density brought us back into the market” Mr Sherlock said.
Pro-invest, founded by veteran hotel developer Ron Barrott and backed by high-net worth investors and institutional money, struck a master development agreement with British-listed IHG in 2013 to develop, own and operate up to 15 Holiday Inn Express hotel in Australia.
Its first Holiday Inn Express will open in Macquarie Park, in north-west Sydney, in March next year, with two hotels to open in Brisbane and Adelaide over the next 12 to 24 months.
Its first Melbourne hotel will take Pro-invest’s portfolio to over 1,000 hotel rooms under the no frills Holiday Inn Express brand and continues the surge in new hotel development nationally as tourism rebounds.
“Our plan is to develop more than 2,200 rooms over the next three to four years,” Mr Sherlock said.
The sale of the City Road site was negotiated by Josh Rutman, Mark Wizel and Lewis Tong of CBRE.
“This significant sale marks the first major land transaction to take place since planning framework changes were introduced in the Melbourne CBD and Southbank,” Mr Rutman said.
“The buyer is looking to deliver a major hotel on the site, in response to the growing demand from tourists for hotel rooms and the City Of Melbourne’s objective to see more hospitality offerings in and around the Melbourne CBD.”
The sale follows the recent approval granted by the planning minister for a 478-room high rise hotel in Little Lonsdale Street.
Opera Australia will remain in Melbourne and is searching for a new home although it retains a lease on the current site.
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