Forrest eyes Waldorf Astoria purchase for $600m

The mining magnate is negotiating to acquire the yet-to-be-built luxury hotel fronting Sydney’s Circular Quay.

Construction at Circular Quay, including at the site of the new Waldorf Asoria. Picture: Lisa Maree Williams/Getty Images

Andrew Forrest is negotiating to make his highest profile real estate purchase yet – buying the yet to be built Waldorf Astoria hotel fronting Sydney’s Circular Quay – for more than $600m.

While a deal is yet to be finalised the billionaire businessman is in negotiations to buy the elaborately-designed six-star hotel from Lendlease which is developing the tower as part of its overall $3bn One Circular Quay development.

Mr Forrest’s property division Fiveight Pty Ltd declined to comment on the impending deal on Wednesday but the negotiations are the talk of Sydney’s real estate circles according to several major sources.

As Australians flee offshore to holiday in Europe and North America, in a seeming counter cyclical move, Mr Forrest has been amassing hospitality assets. Last November he paid $42m for Lizard Island off Far North Queensland through his private investment company Tattarang.

Meanwhile in Sydney, Lendlease swooped on the entire Circular Quay site in a deal worth up to $850m last month, ending years of uncertainty after it passed through the hands of a series of Chinese property developers, including controversial Yuhu billionaire Huang Xiangmo, who has been prevented from returning to Australia by the federal government.

Buying the hotel would give Mr Forrest one of the most prominent buildings in Circular Quay with the price per room on the hotel expected to trounce any other in the country at a hefty $2.5m per room.

The pricing is partly due to the luxurious nature of the Hilton-owned Waldorf Astoria hotel, Australia’s first such brand, with the room rates to soar above even the rival Park Hyatt as guests will have unique views over Circular Quay.

The hotel is part of a larger development that will also include super luxury apartments which Lendlease has flagged it would start marketing by the end of this year.

The overall development will have two towers. The larger is expected to comprise a 59-level luxury residential tower, designed by the late award-winning Australian architect Kerry Hill, which is tipped to break sales records.

The second tower, designed by Kengo Kuma & Associates, will be developed as a 220-room luxury Waldorf Astoria hotel, marking the entry of Hilton’s iconic luxury brand into Australia.

The whole project is on the former site of the landmark Gold Fields House and is earmarked for completion by fiscal 2027.

Competition for luxury assets has not paused in the face of either the coronavirus pandemic or concerns about rising interest rates with a new class of cashed up buyers chasing trophy hospitality assets and opulent apartments despite the lack of mainland Chinese buyers at present.

A purchase by Mr Forrest could spur a new era of ownership of local ownership of hospitality assets, after a period in which locally listed firms bowed out and foreign purchasers dominated the sector.

The landmark nature of the property and Mr Forrest‘s ability to put his stamp on such a unique part of Australia are likely to be driving features of the purchase in addition to the compelling long-term property fundamentals.

The prestigious New York brand is expected to overtake the Park Hyatt as Australia’s most expensive hotel with rates to challenge even the best global properties. While it is hard to imagine the present construction site being transformed into an ultra-luxury hotel and apartment complex, investors have already knocked on developer Lendlease’s door trying to buy the project.

Advised by Michael Simpson of CBRE and Sam McVay of McVay Real Estate, the developer has fielded approaches from global real estate companies trying to secure a position on the project that will become the centrepiece of the redevelopment of Circular Quay.

Lendlease declined to comment.