Qantas looks to sell undeveloped land near Sydney airport

In the largest Sydney real estate offering in decades, Qantas is looking to sell up to 14ha of mostly undeveloped land surrounding Sydney airport.

Qantas is offering 138,000sq m of land near Sydney airport. Picture: Seth Jaworski

In the largest Sydney real estate offering in decades, Qantas is looking to sell up to 14ha of mostly undeveloped land surrounding Sydney airport.

A review of the national carrier’s property footprint earlier this year revealed there is no need for the airline, which is carrying about $6bn in net debt, to develop the five separate parcels, some of which are adjacent to Kingsford Smith Airport and are presently used for staff carparking. The entire site could be worth up to $500m, with Qantas revealing the sale proceeds could help it pay down debt and buy new aircraft.

In a statement, Qantas said the land, amassed since the 1960s, was surplus to its operations.

Despite national publicity earlier this year that the airline would consider relocating from its Sydney base to Brisbane or Melbourne, the review also confirmed that Qantas’s leased corporate head office would remain in Sydney’s Bourke Rd, Mascot for the long term.

The land on offer fronting Coward St, Kent Rd and King St totals 138,000sq m and was progressively acquired from the late 1960s, when the area around the Airport was largely undeveloped.

About 40 per cent of the land is used for carparking for Qantas staff as well as the airline’s aircraft parts distribution centre, engine workshop and other facilities.

A long-term sale and leaseback of Qantas’s 21,795sq m distribution centre, positioned on a 38,920sq m prime industrial land holding, provides a secure income profile for an initial 10-year term, with two further five-year options included in the offering.

Depending on the market response, Qantas may look to temporarily lease back some parcels of land while arrangements are made to relocate the work functions, which is likely to coincide with the time required for development approvals for the industrial zoned land for the new owner.

Qantas said some or none of the land may be sold as a result, with any sale process expected to be complete before the end of the year.

Combined, the total value of the land, which would be sold as freehold land or on a 99-year lease to the airline, was estimated to be worth several hundred million dollars, Qantas said.

Qantas Group chief financial officer Vanessa Hudson said the property review revealed the amount of undeveloped and underdeveloped land held around Mascot.

“In the current climate we’re obviously looking more closely at what is core and what is non-core, and the reality is that we don’t need this land for any of our long-term strategic goals,” Ms Hudson said. “That said, whether we sell some or all of it depends on how strong the market response is.

“We’ve owned some of this land for more than 50 years and much of it is currently used for carparking. Given how Mascot has developed over that time, there’s a lot of value we can unlock by selling it.”

Ms Hudson said the proceeds from any sale would be used “to pay down the debt we’ve built up getting through Covid-19, which means we can start reinvesting sooner in things like new aircraft”.

“Recent lockdowns have obviously been a significant setback for us, but we’ve been working towards putting this land on the market for several months. It’s been part of our planning for a while.”

Expressions of interest close through Colliers on September 1.

Originally published as Qantas looks to sell undeveloped land near Sydney airport