Lendlease makes play for Sydney site

The property giant is focusing its comeback on the top end of the residential market, with its next move targetting a Sydney site a Chinese-Australian billionaire is looking to exit.

Artists impression of plans for 175 Liverpool Street, Sydney.

Development heavyweight Lendlease is circling a major Sydney office tower as it looks to restock its luxury apartment pipeline, in a play where it could emerge with control of a key property overlooking Hyde Park.

A successful move on the near-$1bn office tower would see the Australian major again capitalise on the exit of a Chinese developer which had planned a project but has been unable to realise its ambitions of launching luxury apartments in Australia.

The listed developer has held talks to acquire 175 Liverpool Street, owned by interests associated with Chinese-Australian billionaire Hui Wing Mao, and if it got control of the site it would look to kick off the project in line with its focus on top-end units.

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.

The Bates Smart scheme has been promoted as matching the symmetry and order of Hyde Park, with its art deco War Memorial, as well as being in keeping with the nearby Surry Hills warehouses and laneways.

Buying the site would also be in line with Lendlease’s plans to become the dominant player in the luxury apartment market, where it has had lucrative sales and can absorb some of the rising building costs which have hit other projects.

Mr Hui is understood to have fielded interest from Lendlease and its rivals last year, and had considered a joint venture structure, senior sources said.

The plan for the project includes 289 apartments in dual 36-storey towers as well as retail and commercial space.

While that did not proceed, due diligence was undertaken and Lendlease had rekindled its interest this year, with both parties in an improved position to undertake a transaction.

Lendlease reported healthy results showing it was getting back on track as it sells off assets internationally, and it signalled it would return capital to its core operations in Australia, including luxury towers.

Mr Hui’s Chinese-based Shimao empire has also stabilised after its creditors last month approved a deal to restructure about $US$11.7bn ($18.5bn) in offshore notes, bonds and other credit facilities.

He could also exit profitably after picking up the 48,877sq m office block for $392m in 2014 — well ahead of the boom in both office values and apartment conversions.

The parties declined to comment.

The top end of the apartment market is fast becoming a mainstay for Lendlease and it has needed to restock after almost completing its sales at Sydney’s harbourside Barangaroo precinct and selling most of its apartments at the opulent One Circular Quay development.

Mr Hui has been working on the project for years, In 2019 his company first proposed ultra-luxury towers which would now be worth more than $2bn in total.

A year earlier he toyed with selling a half interest in the office tower, but did not go ahead and if a deal is struck he would join other Chinese groups which have sold out of the local market.

Just last month, Han’s Holdings Group sold another site overlooking Hyde Park, where it has planned a dramatic 80-storey twin-tower scheme, to local companies Billbergia Group and Metrics Credit Partners.

A series of Chinese developers had earlier sold out of Sydney with Lendlease capitalising on the shift, buying the AWH project at Circular Quay, where it is developing its $3bn-plus luxury apartment and hotel development.

Other players are also active in the area. Property funds house Charter Hall is weighing up options for its own hotel and apartment scheme at nearby 201 Elizabeth Street after going to market last year seeking backers for a $3bn scheme.