Lendlease secures Sydney Hyde Park site for new $2.5bn twin tower project

The company is focusing on luxury residential as it pours capital back into Australia. The apartments it is planning could break records in the area.

The project at 175 Liverpool Street is set to be Sydney’s next big luxury apartment complex.

Property developer Lendlease has signalled that it will lead the way in developing luxury apartments, swooping on a site overlooking Sydney’s Hyde Park for a new $2.5bn twin tower project.

The company, with the likely backing of Japanese giant Mitsubishi Estates Asia, has secured the office tower at 175 Liverpool Street, which is controlled by Chinese-Australian billionaire Hui Wing Mao.

The deal, flagged by The Australian, will see the offices demolished and two new towers built. They will become the premier address in the area and drive a re-rating of properties overlooking Hyde Park where other developers are also active.

The move puts Lendlease’s ability to marshal capital to undertake major residential projects on display at a time when its funds management unit is under siege. The company is facing an imminent challenge from listed rival Mirvac for control of its $10bn Australian Prime Property Fund empire.

Lendlease has emphasised its ability to pull off very large transactions, highlighting a pipeline of new jobs where it is able to build large-scale residential and commercial buildings.

The new buildings will also provide the next big CBD offering of apartments and are likely to break records around the Hyde Park area. While it is unlikely to challenge the huge prices paid at Barangaroo – where a penthouse apartment and another floor sold for a combined $141.5m – and Lendlease’s One Circular Quay, where there are hopes the penthouse will exceed this mark, it will dominate its market.

Lendlease did not confirm the Japanese company’s involvement, saying only that the site would be developed alongside joint venture partners, with a selldown of up to 50 per cent expected in the coming weeks.

Lendlease and Mitsubishi Estate Asia set up a joint venture to acquire the One Circular Quay development in 2022. They paid exiting Chinese developer AWH $800m, with another $50m subject to project outcomes. The project has a $3.2bn end value. The price of the Hyde Park deal could be of similar magnitude as the building had previously been on the block for about $800m.

The building’s billionaire vendor last year won approval to replace the existing building with two unit towers designed by Bates Smart. The planned dual 36-storey tower development was to have contained 289 apartments, retail space, and 10,098sq m of commercial space in the lower six levels.

The site is now expected to comprise up to 300 apartments and 2000sq m of retail space, with the units to sport views of Sydney Harbour. Works are expected to begin in the 2027 fiscal year and be completed in 2030, boosting Lendlease’s future earnings profile.

The acquisition has been structured as staged payments, with the project expected to deliver returns “comfortably above” the company’s cost of equity.

Lendlease indicated that it was now focused on chasing new projects that would stock up its pipeline for fiscal 2028 and beyond as it returns about $4.5bn from offshore into its core Australian operations. It has already secured more than $1bn of new local projects, including winning approval for One Darling Point, Sydney.

Lendlease chief executive Tony Lombardo was bullish about the deal. “The acquisition of the 175 Liverpool Street site provides a further opportunity to build on our market-leading credentials in the luxury residential space as we continue to restock our Australian development pipeline beyond fiscal 2027,” Mr Lombardo said.

“The successful completion of One Sydney Harbour, which set a new sales record for a penthouse, and sales achieved to date at One Circular Quay, on track for completion in fiscal 2027, reflect the strong demand for high-end luxury offerings in Sydney that complement Lendlease’s core capability of delivering urban renewal through the creation of mixed-use precincts.

“As we continue to make strong progress simplifying the group, our focus is firmly on growth opportunities across our Australian operations and international investment management platform, as evidenced by $3bn of Australian development restocking and $1.5bn of new investment mandates in the past year, drawing upon strong existing relationships and new international partnerships.”

Locking down a deal with Mitsubishi Estates Asia would also deepen the relationship between the pair and reinforce the importance of Japanese capital, which is driving a wave of developments.

Companies including Lendlease, Mirvac and Stockland, as well as the likes of Frasers Property and Ashe Morgan, have taken on Japanese investors who want an exposure to projects ranging from luxury towers to land lease estates.

Originally published as Lendlease secures Sydney Hyde Park site for new $2.5bn twin tower project