Lendlease snaps up One Circular Quay from Chinese investment house AWH for $850m

The developer will seize control of the landmark property in Sydney after years of uncertainty over its future.

Artists impression of the design of One Circular Quay, Sydney.

Developer Lendlease has snapped up the One Circular Quay site in Sydney, buying the controversial property from Chinese investment house AWH for $850m.

The listed developer, backed by Mitsubishi Estate Asia, will seize control of the property after years of uncertainty over its future in which it passed through the hands of Chinese property developers Yuhu and Dalian Wanda.

The site will now house a luxury apartment and hotel complex which will see the company forge ahead with the most expensive units in Australia in the wake of success in selling the luxury apartments for up to $140m in its towers at Barangaroo on Sydney Harbour.

The play brushes aside interest from private developer Galileo after the development company headed by Black Caviar part-owner Neil Werrett had been in the box seat to buy it after years of delays.

The One Circular Quay project will consist of stunning twin towers on the former Gold Fields House site in Sydney’s Circular Quay.

Lendlease and Mitsubishi Estate Asia have set up a joint venture to acquire the development in Sydney for $800m in upfront and deferred consideration, with an additional $50m payment subject to certain project outcomes.

To be developed by Lendlease and Mitsubishi Estate, and constructed by Lendlease, the proposed towers at One Circular Quay will have an estimated end value of $3bn.

The purchase is a bet that the ultra-luxury residential market will hold up in the face of a broader fall in the property market and that construction costs will not blow out as global supply chains come under pressure.

Mitsubishi Estate currently holds a 19.9 per cent interest in the joint venture. Subject to the satisfaction of certain conditions, this will increase to 66.7 per cent and Lendlease’s ownership will reduce to 33.3 per cent.

The companies said the joint venture further strengthens the ties between Lendlease and Mitsubishi Estate, which includes partnering on the One Sydney Harbour, at the residential towers at Barangaroo, and Sydney Place, at the office project at Circular Quay, developments, and Melbourne Quarter’s residential East Tower.

The development is expected to comprise a 59-level luxury residential tower, designed by the late award-winning Australian architect Kerry Hill, with unrivalled views of Sydney Harbour.

A 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 project is on the former site of the landmark Gold Fields House and is earmarked for completion by fiscal 2027, when it will become some of the world’s most spectacular residential and hotel buildings.

The sale effectively signals the end of the Chinese property development boom and is the second major sale by a Chinese group by a mainland developer in just a month. Greenland sold a $315m site in Sydney’s Erskineville to Coronation Property Group for $315m last month.

The market was agog when Dalian Wanda Group swooped on the site in 2015 with plans for a dramatic skyscraper. But it was thwarted by an early Chinese crackdown on developers splashing out on opulent offshore projects.

Ownership then passed to now exiled Chinese political donor and billionaire Huang Xiangmo via his Yuhu operation. He exited as another Chinese developer, AWH Investment Group, took over in 2019.

The ownership of this entity has been linked to former senior executives of the troubled Evergrande Group but has been shrouded in mystery.

Mr Huang’s companies in 2018 had outlaid more than $1bn to buy the massive Sydney site and another project on the Gold Coast from an arm of then troubled Chinese conglomerate Dalian Wanda. Mr Huang is now banned from entering Australia.

The latest sale is the biggest exit by the Chinese groups that surged into the local market during the last property boom but who have since had their dreams of becoming a new force in Australian real estate shattered.

They have faced a toxic mix of worsening political relations, a tough climate for selling to foreign buyers and China’s repeated crackdowns on capital going offshore for luxury projects.

One Circular Quay