Mitsubishi slated to back Lendlease move on luxury Hyde Park development

Property developer Lendlease is courting Japanese heavyweight Mitsubishi Estate Asia to back its tilt at buying a luxury development site on Sydney’s Hyde Park.

Lendlease is seeking to interest MEA in backing a redevelopment of 175 Liverpool Street, Sydney.

Property developer Lendlease is courting Japanese heavyweight Mitsubishi Estate Asia to back its tilt at buying a luxury development site on Sydney’s Hyde Park.

A move on the site, which has the potential to yield more than $2bn in apartment sales, would deepen the relationship between the pair and reinforce the importance of Japanese capital, which is driving a wave of development deals.

Big property companies including Lendlease, Mirvac and Stockland, as well as the likes of Frasers Property and Ashe Morgan, have taken on Japanese investors who want an exposure to projects ranging from luxury towers to land lease estates.

In the latest play, the local company is seeking a fresh tie-up with the Japanese group to make a play for the tower at 175 Liverpool Street, which is owned by interests associated with Chinese-Australian billionaire Hui Wing Mao.

The billionaire last year won approval to replace the existing building with two unit towers designed by Bates Smart. The planned dual 36-storey tower development would include 289 apartments, retail space, and 10,098sq m of commercial space in the lower six levels.

Winning control of the site would allow Lendlease to kick off the approved project and add to its pipeline of top-end units. It is not known how the ownership would be split, with the listed developer declining to comment.

Lendlease has been chasing luxury residential sites to add to its workbook after completing its unit sales at Sydney’s harbourside Barangaroo precinct and selling most of its apartments at the opulent One Circular Quay development.

Lendlease and Mitsubishi Estate Asia set up a joint venture to acquire the One Circular Quay development in 2022. They paid exiting Chinese developer AWH $800m, with another $50m subject to project outcomes.

The towers at One Circular Quay have an estimated end value of $3.2bn. The billionaire Forrest family’s private investment vehicle, Tattarang, paid over $500m to acquire the under-construction Waldorf Astoria hotel.

An artist’s impression of plans for 175 Liverpool Street, Sydney.

Apartment sales have been strong in the 58-storey apartment tower with rates running at over $95,000 per sq m and higher on top properties like the six sub-penthouses and the penthouse, which is still available.

Setting up another venture would strengthen the existing ties between Lendlease and Mitsubishi Estate, which also includes partnering on One Sydney Harbour at Barangaroo – where there was a $140m penthouse sale – and the commercial Sydney Place development at Circular Quay. The Japanese firm also backed Lendlease on Melbourne Quarter’s residential East Tower.

Lendlease has been on the hunt for new projects in Australia as it brings home $4.5bn worth of capital. The process has been accelerated with the company this week unveiling a joint venture with King Charles’ The Crown Estate.

That sale includes six of Lendlease’s British development projects, comprising high-profile projects in London and Birmingham, and put Lendlease chief executive Tony Lombardo’s turnaround strategy slightly ahead of expectations.

That deal will accelerate the release of more than $300m of capital from its longer-dated international development book and will halve its future funding commitments to $125m.

JPMorgan analysts noted that Lendlease is undertaking a major strategy shift, exiting its international construction and development businesses to become an Australia-focused development and construction business with a global investment management unit.

The Australian development business has $6bn of work in progress, and is looking to restock its development pipeline from the $36bn of opportunities it is chasing.

“Lendlease is embarking on a material business simplification across multiple business and geographies, which carries with it clear execution risks. It also needs to restock a development pipeline in Australia which is heavily skewed to two large projects – One Sydney Harbour and One Circular Quay,” JPMorgan said.