Hotel developer Pro-invest will bring IHG’s Holiday Inn Express brand to the centre of Melbourne, after acquiring two adjoining buildings near Southern Cross Station for about $30 million.
A 300-room hotel along with shops and offices is planned for the 1254-square-metre site running from 595 to 599 Little Collins Street, less than a block from Melbourne’s biggest transport hub. The site currently houses to two low-rise buildings, including one occupied by the Billy Blue College of Design.
It is the sixth Holiday Inn Express hotel in Australia announced by Pro-invest since striking a development agreement with Intercontinental Hotels Group in 2013 to develop up to 15 of the limited-service hotels in Australia and New Zealand.
The first of these hotels, in Sydney’s Macquarie Park, opened at the end of March, with three to open next year in Brisbane, Adelaide and Newcastle.
Pro-invest, led by veteran hotel developer Ron Barrott, recently struck a franchise agreement with IHG to bring the EVEN chain of wellbeing hotels to Australia. Pro-invest raised $300 million from its global investor base of institutions and family offices for its inaugural hotel fund.
The Little Collins Street hotel, due to open in 2018 or 2019, will join a 345-room Holiday Inn Express planned for Melbourne’s Southbank after Pro-invest acquired the former rehearsal premises of Opera Australia and an adjoining building on City Road for $25 million just over a year ago.
“We are confident there is demand in the Melbourne market to accommodate both hotels,” Pro-invest managing director of development Tim Sherlock told the Australian Financial Review. The off-market deal was negotiated by Josh Rutman, Mark Wizel and Lewis Tong of CBRE, who acted on behalf of the Arduca family.
The CBRE team also negotiated the sale of the City Road site to Pro-invest last year, and in June sold a development site on Flinders Lane near Southern Cross Station to Malaysia’s Tune Hotels for $18.5m.
Mr Rutman said residential and hotel developers were taking a longer-term view that Melbourne’s strong growth forecasts were sound and would deliver a “terrific return on their investment”.
“Despite all of the recent barriers created by government and the banks, it has been quite incredible to witness [the] influx of capital seeking out development sites in the Melbourne CBD and surrounding city fringe,” Mr Rutman said.
The announcement of the new Holiday Inn Express capped a strong year for Melbourne’s CBD hotel market, headlined by the sale of the Novotel on Collins Street to the Frasers Hospitality Trust for $237 million in September.
by Larry Schlesinger
Australian Financial Review – 21 December 2016