Malaysia’s Permodalan Nasional Berhad-owned SP Setia is selling its 500-room Shangri-La Melbourne hotel project with a $500-million price tag.

The 4140sq m site on 308 Exhibition Street was bought by SP Setia in May 2016 from Telstra for $101 million. If SP Setia gets its asking price, it will result in a record $1 million per hotel room.

In 2018, the plan for two towers, the 60-level Sapphire by the Gardens luxury apartment tower and the 62-level Shangri-La hotel tower, was announced with a projected cost of $565 million.

At the time of launch, the 300 Sapphire by the Gardens apartments were 95 per cent sold out with 60 per cent sold to overseas buyers. One penthouse apartment had been bought for $14.8 million while another had been priced at $29 million with some interest. 

The hotel tower has a 57,114sq m gross floor area with a skybridge connecting it to the apartment tower at level 46.

It overlooks the UNESCO-listed Carlton Gardens and Royal Exhibition building and is scheduled for completion in late 2023.

Colliers’ Gus Moors said it would open in early 2024. Moors, along with Karen Wales and Deloitte’s Stephen Hynes and Paul Bartlett are brokering the sale.

“As hotel markets across the country move into rapid recovery mode, the timing of the delivery for the Shangri-La will see this 500-room property open at an ideal time in the hotel cycle,” he said.

Moors said Multiplex has now finished the construction on the project.

“They have finished construction of the structure and have started the fitout phase and so they feel this is the ideal opportunity for an investor to come onboard at this phase of the construction and to take over the end product,” Moors said.

Hynes said the hotel had panoramic 360 degree views of the city and would include luxury amenities. 

“Amenities will include a range of eclectic bars and restaurants with alfresco dining, expansive conference facilities, a spa and wellness centre, an indoor heated swimming pool and more,” Hynes said.

The hotel is being sold via an international expressions of interest campaign closing April 28, 2022.

▲ Malaysian owned SP Setia's twin tower project, Sapphire by the Gardens and Shangri-La, overlooking the Carlton Gardens at 308 Exhibition Street in Melbourne. Source: SP Setia

SP Setia’s 2020 annual report forecast a gross development value of $1 billion (RM3.01 billion) for the entire project. 

SP Setia also has a residential project caught up in the Probuild collapse with Probuild slated as UNO Melbourne’s builder.

UNO Melbourne’s plans include 634 apartments, a childcare centre, shops and a cafe over 65 levels with 61,429sq m of total floor space at 111-125 A'Beckett Street. 

SP Setia bought the site for $61 million in 2017, breaking the land value record with $35,037 per sq m, even more than the record it set for the Shangri-La site of $24,396 per sq m.

The estimated project cost, according to BCI data, was $200 million with SP Setia’s 2020 annual report forecasting an expected gross development value of $462 million.

SP Setia also saw revenue decline from RM3929 million (A$1305m) in 2019 to RM3228 million (A$1072m) in 2020 with the Australian portion of that revenue increasing from RM8 million (A$2.66m) in 2019 to RM93 million (A$30.89m) in 2020 as units were presold in both the UNO Melbourne and Sapphire by the Gardens properties.

The company recently announced a revenue increase for 2021 of RM3762 million (A$1250m) in its 2021 fourth quarter results in February.  

The company currently holds 8528 acres or RM12,661 million ($4206m) of landbank assets across the UK, Australia, Japan, China, Singapore, Vietnam and Malaysia with a total expected gross development value of RM136.87 billion (A$45.47bn).

It has recently announced investments in healthcare property projects in Malaysia and continues to hold a 40 per cent stake in the Battersea Power Station development project in London which has recently announced the start of its second stage with 254 apartments and a 20,000 sq ft food hall. 

SP Setia’s other projects in Melbourne include the 332-apartment project Parque at 555 St Kilda Road and Fulton Lane at 155-165 Franklin Street.