Developers size up Novotel and Ibis hotels ahead of Darling Harbour rezoning

Plans for a big revamp of the hotels that overlook a rapidly changing part of Sydney Harbour are likely to ignite a scramble among developers to win control of a redevelopment scheme.

The Novotel and Ibis hotels, pictured behind Mirvac’s Harbourside project, are set for redevelopment. Picture: Lilly Vitorovich

Developers are again circling the Novotel and Ibis hotels in Sydney’s Darling Harbour in the ­expectation that the NSW government will back plans for a radical revamp of the ageing complex into a high-rise apartment and hotel precinct.

The site’s owner, the Abu Dhabi Investment Authority, via investment manager Salter Brothers, has won through to the second stage of the state’s controversial unsolicited proposals ­process.

The group’s plans for a dramatic overhaul would see refreshed hotels – probably managed by incumbent hotelier Accor – and about 1000 apartments built on the site.

Multiple property executives told The Australian the landmark complex was likely to come to market as early as next year, once approvals were under way, allowing for a staged development of new towers.

A previous sale process in 2021 aimed to secure about $500m but winning permission for a dramatic overhaul of the complex at a time when luxury apartment markets are firing could provide a windfall for ADIA, which bought the hotels as part of a $700m portfolio in 2013.

The existing investment manager, Salter Brothers, could also look to marshal capital in order to take control of the property, given its knowledge of the scheme. But executives said rival property players would also be keen on the site, noting that big developers including Billbergia and Cbus Properties had previously looked at the hotels.

The new scheme for the site would result in the Novotel being replaced with a new hotel, a revamp of the Ibis into a higher-grade hotel, as well as the 1000 apartments. The scheme’s huge scale could tip the balance of Darling Harbour away from hospitality and more towards being a luxury residential zone.

The Novotel and Ibis hotels at Darling Harbour. Picture: NewsWire/Joel Carrett

But experts said the revamp could provide the boost the area needs, effectively completing the overhaul of the western side of the precinct. New hotels have already been undertaken, including Chinese-backed Greaton’s development of The Ribbon, and tycoon Jerry Schwartz’s development of a luxury Sofitel hotel.

Hotel consultant Dean Dransfield was bullish about the scheme’s prospects, saying it would effectively connect up the entire precinct and create new links to a waterfront promenade. “It could become one of the great parading walks in the world,” he said.

Committee for Sydney chief executive Eamon Waterford flagged the shift in use in the harbourside precinct. “Great waterfront precincts are increasingly becoming mixed use, with space for visitors, residents and workers across precincts,” he said. “We’re seeing the transformation of Darling Harbour from its previous life as a tourist trap into a community full of life and vibrancy – and that’s good for tourism because we know visitors want to experience places that locals love.”

He noted the improving connections in the area. “Redevelopment of this site presents exciting opportunities – new homes near the Pyrmont Metro, better pedestrian links across the light rail and revitalised spaces for Sydney’s visitor economy,” he said.

“This is a rare chance to raise the bar – and create something even better for everyone, no matter your postcode or pay packet.”

There has long been work done on how to best get value out of the Novotel site. ADIA had tapped architectural firm Architectus to review the site ahead of the last sale process. It revealed there was substantial upside from a redevelopment. Including the adjacent car park would allow for larger buildings.

Originally published as Developers size up Novotel and Ibis hotels ahead of Darling Harbour rezoning