Brookfield lists Luna Park for $70m in move that could see dramatic revamp

Despite heavy restrictions on the iconic Luna Park site being listed for $70m, buyers could range from international leisure giants to local hospitality kings like Justin Hemmes.

Luna Park has been the site of a series of planning battles. Picture: Rae Wilson

Canadian giant Brookfield has put the famed Luna Park on the block in a move that could lead to a dramatic revamp of the iconic fun park on Sydney Harbour.

But residential property developers will have to steer clear of the property as it must remain an entertainment venue under NSW laws.

The sale of Luna Park is expected to reap its multinational owner up to $70m and bring out a mix of billionaire trophy hunters, entertainment companies keen to expand, and property investors.

The park has been the site of a series of planning battles and political controversies over the decades and could be overhauled by a new owner willing to invest in the property and update the ageing facilities and rides.

Private equity players and public companies may chase the asset as theme parks are making a recovery on the back of higher tourism and the potential to negotiate the Brookfield lease which ends in 20 years.

Luna Park however will remain an amusement facility with no changes to allow major development.

Brookfield, which has poured millions into revamping the park in recent years, has put it on the block via real estate agency CBRE but the site is only allowed to be used for public recreation, public amusement and public entertainment under NSW laws.

The venue is owned by the NSW government agency Luna Park Reserve Trust and Brookfield has a lease on the park that runs until 2044.

Luna Park in Sydney from a ferry. Picture: Rae Wilson

An incoming buyer would likely look to get this extended in return for freshening up the amusement park and putting in new facilities.

A spokeswoman for the NSW Department of Planning, Housing and Infrastructure said that Brookfield had entered a standard commercial leasehold when it took over the lease on the park 20 years ago.

“The current lessee is undertaking a share sale process with expressions of interest open till late August,” she said. “The land and site will remain under the ownership of the NSW government.”

The spokeswoman said Luna Park would continue to operate as normal and the trust that owns the site “will work with the existing lessee or new lessee to ensure that Luna Park remains a vibrant and successful amusement park for the enjoyment of the people of Sydney and NSW”.

Big groups are likely.to chase the opportunity to turn around the park after Brookfield made significant investment in recent years in the wake of the pandemic. These include $30m poured into nine rides in 2021 and about $15m spent on Big Top to make it into an immersive complex.

Cloudy skies over the Sydney's Luna Park. Picture: NCA NewsWire / Damian Shaw

Despite the restrictions, the park could be revamped with new rides, eateries and conferences facilities by a new theme park operator.

Those familiar with the park said more modern rides could attract more visitors but this would require overcoming objections from residents, which have fought against noisy attractions in the past.

The park’s latest accounts show that it generated a net loss after tax of $579,820 in 2023, which accounted for financing costs and payments to lender Metrics Credit Partners.

But it made a gross profit of about $8.36m on revenue of about $56.85m and buyers are expected to see the site as an opportunity to put their own stamp on the iconic Sydney Harbour venue.

In demand

Theme parks have been running hot. Melbourne-based BGH Group in 2020 made a $586m takeover of Village Roadshow cinemas, studios and theme parks, taking on Gold Coast properties Warner Bros. Movie World, Sea World and Wet’n’Wild.

The listed Coast Entertainment Holdings, which owns Dreamworld, could also look at the park, as it looks for expansion options after exiting the United States restaurant industry.

Other contenders could include Sydney’s well-heeled hospitality tsars, including Merivale’s Justin Hemmes, who is one of the city’ canniest property players, and rival publicans. They may face competition from the likes of Artemus Group which has taken over Sydney’s Manly Wharf in a $100m play, adding to a collection that includes Brisbane’s Howard Smith Wharves.

Billionaires that could bid for the site include Lindsay Fox, who picked up Luna Park in Melbourne for $7m, two decades ago. The trucking tycoon was later part of a powerful consortium including listed developer Mirvac, Direct Factory Outlet founders David Wieland and David Goldberger, Baracon Group and Frank McGuire that unsuccessfully tendered for the redevelopment of St Kilda’s neighbouring triangle site.

Brookfield has tapped real estate agency CBRE’s Simon Rooney, James Douglas and Paul Ryan to run a global campaign for the amusement park.

Mr Rooney said the sale “presents a unique opportunity to secure the Luna Park business in a globally recognised Sydney landmark underpinned by outstanding investment fundamentals and a strong brand”.

“Trophy assets such as Luna Park are tightly held and rarely traded, with the campaign providing an opportunity to secure a world class entertainment, event and experience destination with further upside,” he said.

Luna Park Sydney chief executive John Hughes said since opening in 1935, the park had played an important role in Sydney. “The business has undergone a strategic transformation, with a $40m upgrade during the last four years adding new rides and immersive experiences, both of which are driving record visitation. Our outstanding management team is pursuing a strong pipeline of new opportunities that will further add value to the business,” he said.

Luna Park Sydney now has 17 amusement rides, the heritage-listed Coney Island, 7,000sq m of building floor space, including Sydney’s Immersive Big Top and the 1935-built Crystal Palace as well as a 389-space car park.

Mr Rooney said that Luna Park was more than just an amusement park. “It is the beating heart of Sydney with an impressive track-record of long-running events including Halloscream, New Year’s Eve and collaborations with key citywide festivals such as Sydney Festival, Vivid and Lunar New Year,” he said,

There is also the chance to lift income by putting in more rides and immersive experiences or food and beverage outlets. The sale follows investment in redeveloping the park’s Big Top as a 3,000sqm multipurpose venue, catering to growing global demand for captivating and all-in experiences.

But getting new rides into the park has often run up against noise complaints from residents. In 2018, the NSW government agreed to Brookfield’s demands to remove planning controls to allow it to erect rides at the park, some permanently fixed and up to 12-storeys tall, without having to seek development approval.

That came months after the NSW government defeated Brookfield in a court case in which it sought that freedom from standard planning procedures.

The operator was also allowed to install rides where had been prohibited near the northern end of the Harbour Bridge, after a campaign by Brookfield ahead the NSW election in which it threatened to close the iconic amusement park unless it obtained freedom from having to lodge development applications for new rides.

In 2016, then NSW property minister Dominic Perrottet – who would later become premier – stared down Brookfield’s demand that he honour a backroom deal struck under his corrupt Labor predecessor Tony Kelly and refused to extend the developer’s lease over the Sydney’s iconic park.

The NSW government instead struck a new agreement in which Brookfield gave up any rights it had under the in-principle agreement signed in the final weeks of the Keneally Labor government, which would have extended its tenure at the amusement park by another 40 years.

The 3ha Sydney Harbour site is crown land, but the state government paid the developer $3.2m to buy out a separate lease over a small clifftop section, to create a new public park.

Brookfield had sought the extended lease after a deal to sell its Luna Park interests to an Asian investor fell through in 2010 but the latest sale is expected to see big players vie for the unique property.