Australia’s Richest 250 #89: Justin Hemmes

It turns out Justin Hemmes — the man once described as Sydney’s ‘ultimate playboy’ — is now most passionate about his burgeoning portfolio.

Justin Hemmes. Picture: Nic Walker.

Justin Hemmes, the staple of social pages and gossip columns, with a high-profile relationship split just behind him and a past that includes crashing speedboats and cars, is a billionaire for the first time thanks to his passion for property.

FULL LIST: Australia’s Richest 250

He has built the family hospitality business Merivale into an empire worth $1.05 billion by dominating Sydney nightlife, and making dozens of canny and strategic property purchases, refurbishments and revamps.

Merivale boasts venues and brands such as Ivy, Establishment, Slip Inn, Coogee Pavilion and the Newport Arms, and has made the city famous for being a world-class food and drink destination. All up, Merivale has 89 properties, more than 3000 full and part-time employees and $400 million in revenue annually.

It sounds like, and is, plenty. But 46-year-old Hemmes is hardly resting on his laurels. Instead, he’s set to embark on his biggest project yet: a $1.5 billion radical overhaul of the existing Ivy precinct, launched in 2007, that will completely demolish what is already there and transform a huge site with a 100m frontage on George Street.

Hemmes is still working through the plans, but they are set to include a 55-storey hotel and office space, as well as hospitality outlets such as restaurants and bars, an expanded Ivy, and potentially even residential apartments.

“What else would I do? I don’t have many other skills,” Hemmes laughs, sitting in Merivale’s office in Ivy. “Maybe I could be a professional kite surfer. But property I love, and it is such a beautiful thing.

“Maybe I’m more like an artist. I always wanted to create something here; that has always been the plan. We just didn’t have the financial capabilities 10 or 15 years ago to do it, and nor did I think the city was ready. But with the opening up of George Street and the trams going through, the excitement and development that is happening in the city is unprecedented.”

It might be hard to find someone in Sydney who hasn’t been to a function at Ivy and the area boasts a staggering 20 different businesses under Hemmes’ control, from the Royal George pub to the Ministry of Sound club, restaurants including Felix and Uccello, and even a patisserie, Lorraine’s.

Yet Hemmes wants to knock it all down, completely demolishing it and leaving what he says will be a blank canvas to operate on, and he predicts that while he won’t knock down the existing Ivy nightclub for two or three years, he will be open for business within seven years.

“I basically want to reimagine how we work and play and socialise, and how we interact with people, and sleep. And bring it all into what is one of the most iconic addresses in Australia.”

The twist this time is that Hemmes doesn’t think he’s taking the risk he has in the past. His private life is still the stuff of discussion after his split last year from partner Kate Fowler, with whom he has two young children. He says there is a bit of a “stigma” around his reputation, and claims he lives a relatively quiet life compared to the past. He even rides to work on an electric bike, though he does add “I love to have fun; who doesn’t?”

But in business terms, Hemmes says he is more settled than ever. Working alongside his sister Bettina at Merivale, he is a hands-on business owner who slashes and remodels venues with close attention to detail. He says he spends a lot of time finding properties, conceptualising and then designing their transformation, and has about three or four projects in the pipeline at one time.

‘Hemmes worked as a brickie’s labourer for a year and a half, built his first CBD project, Hotel CBD, in 1995. He took the big leap with Establishment.’

“I would like to say they get easier each time,” he says. “The last one, in Bondi [the Royal Hotel, bought for $30 million in late 2017], was pretty smooth. So that is a good sign.”

It is all a far cry from when he made his first big mark on Sydney in 2000, with the opening of Establishment further down George Street from Ivy. Establishment now boasts the renowned restaurants est and Mr Wong, as well as bars such as Palmer & Co and hemmesphere, and has been cited as of truly international standard.

Before it was built, Hemmes had become bored working in the office with his late father John and mother Merivale, who had revolutionised the fashion industry with The House of Merivale in the 1960s and then become CBD property landlords. He worked as a brickie’s labourer for a year and a half, building his first CBD project, Hotel CBD, in 1995, and then revamping Slip Inn to include bars and a nightclub.

He then took the big leap with Establishment, creating it in the burnt-out ruin of the old George Patterson House, which had lain dormant for three years.

“There was nothing to compare it to, and I couldn’t get the finance at first after doing the rounds of the banks. I did the whole [profit and loss statement] and sensitivity analysis on an Excel spreadsheet on my computer at the age of 25. That’s how we presented it. I had pessimistic, realistic and optimistic categories, and I showed those three. I also had a ‘very optimistic’, but never showed them that one! But I had faith that if you create something that people want, they will come. It is that simple, if you get the right mix.”

Hemmes would eventually get a loan from Commonwealth Bank for the project, and it would be an outstanding success. That led to the $160 million Ivy, but delays to that project in the planning stage again put Merivale under pressure, and Hemmes was using cash flow from other parts of the business to pay interest on the loan he had taken out to buy the site for $22 million in 2004.

“I remember saying to Dad, ‘I think we will have to pull the plug and if this keeps going it will be too much’. But he asked me if I thought it would be any good, and I said ‘yeah, it is going to be amazing’. So you have to stick to it, he said. And I did.

“My father had tenacity, never taking no for an answer, and any road block was just a hurdle.”

Hemmes says he will most likely bring on an investment partner for The Ivy revamp, and adds that he needs more expertise on the construction side to pull off a project on the scale he is imagining.

Otherwise, there is the next deal to make — he admits to hoping the pub market isn’t at a peak, and competition for sites is tough — and the challenge of coping with Sydney’s tough lockout laws, which have seen night life in the CBD and Kings Cross virtually come to a stop after midnight.

Hemmes says the laws have had a big effect on his business, and admits to having had to change the focus to making more money from food, and certainly before midnight. But those are, as he says, mere stumbling blocks. He has to keep going.

He says that he has looked around elsewhere for projects, in Australia and abroad, but says he keeps finding deals in Sydney that “tickle my fancy more”.

“I love the city and believe in its future, and I get such a buzz from people interacting in our venues,” he says. “I get goosebumps walking in and seeing a venue full. My mantra is to improve people’s lives, and I feel if I can add to someone’s work or social life then I’m doing a good job. It inspires us to do the next one.

“People are infectious, and I’m in a business where people come to us for a good time and all I have to do is facilitate that. We are not delivering bad news or making life difficult for people. It is a fortunate job.”

For iOS device users, if you are unable to reach The List via the link above, paste https://www.theaustralian.com.au/business/australias-richest-250 into your web browser.