Brady Group Swaps Quick Exits for Long-Term Property Returns

For almost 50 years, Brady Group built apartments in Melbourne’s CBD and sold them. Its newest tower is another one the group intends to keep. Sixth in the group’s run of CBD hotels, Brady Hotel Elizabeth Street opened on October 7 with 211 rooms at 278 Little Lonsdale Street. Stretching the length of Zevenboom Lane, a 40m mural by Melbourne artist Kitt Bennett leads guests to the tower’s door. Above, 31 storeys rise from a site with a long planning history. Plans for the site once showed a 59-storey apartment tower in place of the old Phillips Shirts building. Instead, the group acquired, designed, developed and built a hotel that it now runs itself. Hotel projects typically split the work between a developer, an external builder and a separate operator, often a global brand on a management contract. Here, one company fills every role—managing director Tony Brady sees that as the group’s main advantage. “Having our own development, design and construction capabilities means we can control the process from the initial concept through to the finished building,” he tells The Urban Developer . Since the mid-1970s, Brady Group has developed and built more than 2900 CBD apartments, and the model was simple: complete, sell and move on. Hotels came later. The first, at 30 Little La Trobe Street, opened in 2014, followed by Jones Lane in 2019 and apartment hotels at Hardware Lane and Flinders Street in 2021 and 2022. Brady also developed voco Melbourne Central, which it operates under an IHG franchise. ▲ Tony Brady (centre) with guests at the opening of Brady Hotel Elizabeth Street. The group’s CBD portfolio now tops 1000 rooms. The growth, according to Brady, began with a question: what if, instead of selling the finished building, the group kept it and ran it? “We’re builders and property developers first and foremost,” Brady says. “We’ve spent decades developing and constructing buildings across Melbourne, and today we’re applying that experience to creating hotels that we also own and operate.” Margins were not the trigger for the change, according to Brady. Keeping the asset was. “It wasn’t necessarily about one model suddenly becoming more profitable than the other,” he says. “Rather than completing a building, selling the apartments and moving on, hotels gave us the opportunity to retain the assets we’d created and generate income from operating them. “Elizabeth Street is another chapter in that story, a building we acquired, designed, developed and constructed, and which our own hotel team now has the privilege of operating.” Approval for the hotel came almost a decade ago. A 2017 VCAT decision trimmed the earlier residential scheme to about 30 levels and approved the tower for hotel use. ▲ Brady Hotel Central Melbourne, between Melbourne Central and RMIT, was the group’s first move into hotels that came in 2014. Asked whether apartments would stack up on the site today, Brady is measured. “Potentially, but it would need to be assessed against today’s construction costs and market conditions,” he says. “What’s important is that we’re very comfortable with the decision we made and the building we’ve delivered.” Part of the nine-year gap between approval and opening can be traced back to the pandemic, which disrupted supply chains and labour and pushed up material costs. Those pressures persisted long after Covid ended, according to Brady. “Having our own construction capability has been an important part of how we approach those challenges,” he says. “It gives us direct involvement in planning, procurement, managing costs and making decisions as projects progress.” The construction arm also takes on outside work. The group is building 536 apartments for other developers across three residential projects Elsternwick Gardens for Milieu, Aria Melbourne for Evolve and Scotch Hill Gardens for Hamton. “There are obvious advantages in having greater control over construction programs, costs, procurement and quality, but I wouldn’t necessarily reduce that to a simple dollar or time saving,” Brady says. “When you’re building assets that you intend to keep, there’s a real incentive to get the construction right, not just for handover, but for the next 20 or 30 years.” Operations staff join the process during design, so the practical needs of running the hotel shape the building before it is finished. ▲ Rather than build from scratch, Brady Group converted an apartment block on Lonsdale Street into its Hardware Lane hotel. Conversion another route “Not every hotel needs to be constructed from the ground up,” Brady says. “Sometimes there’s an opportunity to take an existing building and adapt it for another use. But the fundamentals have to work.” At 388 Lonsdale Street, the group bought 147 completed apartments for a reported $80 million and reopened the block as Brady Apartment Hotel Hardware Lane in 2021. Rising hotel supply across Melbourne has not dented the group’s appetite. “Of course, increased supply means you have to compete,” he says. “But competition is healthy.” Returning to build-to-sell residential has not been ruled out, though any future project would hinge on the site, planning, construction costs and demand, Brady says. “We’ve reached an important milestone with more than 1000 rooms, but I don’t see that as an endpoint,” he says. “There’s still plenty of opportunity ahead.”

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Leon Della Bosca
Mon 26 Oct 26

Brady Group Swaps Quick Exits for Long-Term Property Returns

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