Why the NSW Government could be forced to pay Justin Hemmes’ Merivale $234.5 million
Hospitality tsar Justin Hemmes has taken a NSW judge and the Land and Environment Court on a tour of land that would have been “Ivy 2.0” to convince them Sydney Metro short-changed him $142.8m over acquisition of land.
Hospitality tsar Justin Hemmes has taken a NSW Judge and the Land and Environment Court on a tour of what would have been “Ivy 2.0”, in an effort to convince the court Sydney Metro short-changed the Merivale boss $142.8 million over the acquisition of land at the heart of the CBD.
The Daily Telegraph can reveal Hemmes and his legal team toured the site last week with Justice Sarah Pritchard, after the Land and Environment Court launched its hearing into the ongoing legal battle between the hospitality king of Sydney and Sydney Metro.
The Merivale boss could be paid $234.5 million by the NSW Government, if his claims in the Land and Environment Court are agreed with.
In two weeks of hearings, the Land and Environment Court heard that Sydney Metro contractors valued land owned by Merivale at 312 to 318 George St at “approximately $91,738,454”.
At the same time, lawyers for Mr Hemmes confirmed to the court that valuers were convinced the property was worth $214,874,500 in a stark divide between the parties.
Mr Hemmes acquired the land in November 2018 for $77 million “to consolidate it with its interests at 320 George and 330 George” before Sydney Metro placed a compulsory acquisition order on the properties in 2022.
Lawyers for the hospitality mogul told the court this week that Sydney Metro valuers should have taken into consideration the “Ivy 2.0” masterplan when conducting valuations on the properties.
Ivy 2.0 would have seen a towering “mixed-use commercial, hotel and hospitality venue” across Hemmes-owned properties at George St, which according to submissions to the court, had a value of “$525.9 million” when the redeveloped precinct was completed.
During hearings this week, lawyers for Sydney Metro questioned “divergences in the expert opinions” of the valuers for both parties.
“There are numerous disagreements between the experts,” a lawyer for Sydney Metro said. “Valuers, informed by the town planners and architects ... have formed very different opinions as to the development potential of the acquired land ... resulting in a vast $104,900,000 disparity in value.”
However, the $91 million offer on the land from Sydney Metro comes after the department revised down valuations in an earlier offer of $102 million in 2024, despite assessments being conducted by the NSW Valuer General.
Lawyers for Merivale said Sydney Metro had taken a “flawed approach” to assessing the value of Merivale properties the department had acquired, arguing it hadn’t even accounted for “market growth” over the four-year period the property was held by Merivale.
The Sydney hospitality king’s legal team also questioned why Sydney Metro didn’t take into account the “premium that the acquired land would have attracted” as part of an amalgamated site for the future Ivy 2.0 plans.
The Land and Environment Court hearing this week also heard Mr Hemmes was seeking more than $19 million for “easement land” neighbouring his Ivy Precinct, as well as $657,502 in legal and contractor fees.
Mr Hemmes, his legal team and representatives of Sydney Metro conducted a site visit of the now demolished commercial precinct at George St with Land and Environment Court officials last month.
A NSW Auditor General report previously found Sydney Metro “did not complete detailed plans or negotiation strategies for the high-risk and high-value acquisitions”, resulting in the office calling for the department to make “plans and strategies for the acquisition of high-risk and high-value properties”.
A Sydney Metro spokeswoman told The Daily Telegraph the department “makes every effort to avoid acquiring privately owned property interests wherever possible and we understand it can be a difficult time when compulsory acquisition is necessary”.
“If a property is compulsorily acquired, the Valuer General independently determines the compensation payable,” the spokeswoman said.
The representative said she could not comment further on the matter.
The battle in court comes as Mr Hemmes and his property partners in Lendlease and Mirvac may be the last contender in a bid to win a multibillion-dollar Sydney Metro contract to build two skyscrapers at the Hunter St Metro West station precincts, which could reach heights of more than 50 storeys each.
Mr Hemmes’ Metropolis Consortium was the “sole tenderer” for the sites after a Canadian property group Brookfield pulled out of the race in June.
The former Merivale site is expected to be turned into a 51-storey over-station development, which would “revitalise Sydney’s northern CBD and become a gateway to jobs, business and tourism and a catalyst for economic recovery”.
The Metro spokeswoman said it would “assess the Metropolis Consortium’s proposal in line with NSW Government policy and objectives, and having regard to Government comparators and independent cost assessments, to determine if it meets all requirements and delivers value for money”.
“The contract for Hunter Street station is due to be awarded late in 2025,” she said.
Merivale was contacted for comment.
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