Malaysian developer set to sell 50pc stake in Melbourne’s Shangri-La
Melbourne’s glitzy Shangri-La Hotel could have a new co-owner within weeks, with Malaysian real estate developer SP Setia poised to sell half of the tower to an unlisted credit fund at a $500 million-plus valuation.
Street Talk understands sell-side advisers Deloitte and Colliers are in the process of signing a binding contract with a party who will take ownership of 50 per cent of the five-star, 60-storey hotel that the pair has shopping around as a competitor to the iconic Crown Melbourne.
Sources said Sepia was open to a 100 per cent sale, but decided to retain the equity stake as it worked through a fit-out of the rooms. It is hoping to open its doors to guests in late 2025.
Should a deal be signed as expected, it would give the credit fund a slice of the Exhibition Street property overlooking Carlton Gardens and the Royal Exhibition Building. The hotel, built above an old Telstra site, was pitched to prospective buyers as “one of five iconic Shangri-Las around the world”. SP Setia began seeking buyers more than two years ago with expectation for $500 million on a 100 per cent basis.
Along with Multiplex, the builder, SP Setia finished construction last year and is now jazzing up their rooms. The striking twin-tower structure – designed by Fender Katsalidis and Cox Architects – houses the Shangri-La in one wing and a luxury apartment block dubbed the Sapphire by the Gardens in the other.
Welcome to the Shangri-La
Sale documents, sent to prospective acquirers and obtained by this column, show the hotel will have 489 rooms, two restaurants, a speakeasy bar and two lounges, christened Horizon and Skybridge. There is also a grand ballroom and functions area with more than 110 seats and standing room for 1500. Facilities for guests include a 25-metre indoor pool, a kids’ pool, a gym and a spa.
It hopes to let out its room at an average daily rate of $669 in 2025, which should climb to $723 by 2027. The occupancy rate is expected to go from 75 per cent next year to 87.1 per cent within three years, prospective buyers were told.
As of February, its rate card was higher than Crown Towers, Sofitel and Grand Hyatt.
“A premium was applied to the room rate for the Shangri-La forecasts relative to the luxury hotel competitor set to reflect the superior location of the hotel and that the development was expected to be at the higher end and a ‘new’ luxury property,” the flyer said.
To further justify its premium room pricing, the sell-side advisers said the hotel would be supported by the “pulling power of the luxury Shangri-La brand for Asian travellers” and should eventually run at occupancy rates of just under 90 per cent, as last seen before the COVID-19 pandemic.
SP Setia is listed on the Kuala Lumpur Stock Exchange, and bought the site from Telstra for $101 million in 2016. It spent about $600 million on building the two towers – and now is in line for a juicy payday.
