Apartment developer Billbergia eyes Darling Harbour hotels for $540m

Apartment developer Billbergia is heading the field in the race for two major hotels in Sydney’s Darling Harbour.

The Novotel Hotel at Darling Harbour in Sydney could make way for apartments if developer Billbergia buys it. Picture: NCA NewsWire/Joel Carrett

Apartment developer Billbergia is heading the field in the race for two major hotels in Sydney’s Darling Harbour being sold off by the Abu Dhabi Investment Authority, with plans to fork out about $540m and then dramatically overhaul the properties.

The private company is looking to buy the Novotel Sydney on Darling Harbour and ibis Sydney Darling Harbour, which together have about 780 rooms but sources said the first property could be converted to units and a more luxurious hotel be built where the ibis currently stands.

The ibis hotel is on strata title and the Novotel is freehold, so it could be used for apartments. Billbergia has projects across Sydney’s suburbs and its pipeline includes more than 10,000 units as well as shopping centres, offices and warehouses but it declined to comment.

The Sydney group has edged ahead of Melbourne-based Cbus Property, which has also shown interest in the hotels being marketed by real estate agencies CBRE and Colliers.

The impending deal could even top the coming sale of the luxurious Hilton Hotel Sydney, which is being bought by Baring Private Equity Asia. A sale of that property would mark the exit of Chinese-founded trading house Bright Ruby from the local market after it picked up the George St hotel back in 2015 for $442m.

The ibis hotel at Darling Harbour. Picture: NCA NewsWire/Joel Carrett

Property developers are stalking more of Sydney’s top hotels eyeing their potential for apartments in coming years. Earlier this year developers wanted to split off the prized Sir Stamford Circular Quay near the Sydney Opera House from a portfolio offered by Singaporean tycoon CK Ow. But he instead opted to keep the entire $1bn Stamford hotel empire.

A conversion of the Darling Harbour hotels is yet to be approved but the harbourside area is likely to have more apartments after Mirvac won approval for a 42-storey tower atop a revamped Harbourside shopping centre. The Star Sydney is also pursuing development plans for a hotel and residential tower at its Pyrmont property.

The Darling Harbour deal also shows that the initial “recovery trade” has shifted on to buyers considering the longer-term best use of sites.

Just last week, Melbourne developer Paul Fridman teamed with apartment developer and builder Piety Group on the $178m acquisition of Double Bay’s dowager InterContinental hotel. But his focus for now is on bringing the dynamism back to the property, and he has lured top restaurateur Maurice Terzini of Bondi’s Icebergs to take control of the hotel’s food and beverage department.