NSW Govt to sell off major hotels

Circular Quay is set to undergo a significant upgrade, but it’s coming at a pretty mighty cost.

According to Business Insider, the NSW government is selling some of the city’s best hotels for a $200 million upgrade of the Circular Quay wharves.

The move is part of the government’s “asset recycling” program, with the Shangri-La and Four Seasons hotels in the CBD, the Novotel and Mercure hotels at Darling Harbour and commercial offices at Darling Quarter to be offloaded.

The hotels are individually owned, however the land is leased from the Sydney Harbour Foreshore Authority (SHFA), which will also be given the chop in this move from the Baird government.

SHFA owns these sites set to be sold, with the state government moving its functions elsewhere, with property management shipped off to Government Property NSW and events to Destination NSW.

SHFA staff will move to the Department of Finance, Services and Innovation, however according to Business Insider, the premier couldn’t comment on whether or not the killing of SFHA would result in any job losses.

Other responsibilities for managing the harbour foreshore will be handed over to the Greater Sydney Commission.

These sites were deemed unimportant in the long run by a review of government-owned lands around Sydney Harbour, according to NSW finance minister Dominic Perrottet.

“There is absolutely no reason in the 21st century why the NSW Government needs to be the landlord for these luxury hotels,” he said, per the Business Insider.

“The review has identified a number of non-core government buildings in The Rocks area that may also be suitable for divestment, but this would be subject to a review and potential strengthening of heritage conservation controls.”

An artist’s impression of the Circular Quay upgrade.

Perrottet said the review “revealed duplication and inefficiency” in the SHFA, with the body owning some of the state’s most significant assets, as well as being responsible for over 200 leases, 150 licenses and 115 tenancies.

The minister said the organisation had around $1 billion in assets under its control and the government will continue to look at which properties it should cull.

Per Business Insider, there was no official dollar sign that the government expected to rake in from the sale of the hotels, and the premier wouldn’t reveal how much revenue Treasury received under the existing leasing arrangement, arguing that putting the funds towards the Circular Quay upgrade was a better use of the money.

Mike Baird said his government was now consulting with the Commonwealth to examine “the most appropriate land use planning, heritage, and management framework” for The Rocks area.

The announcement comes off the back of the sale of 293 public housing properties, including 121 terrace houses around The Rocks and Millers Point, moving 400 public housing tenants out of the historic area.

The government will set aside $200 million from the sale of the hotel properties for the Circular Quay upgrade, following on from last year’s $3 million upgrade of the ferry and train hub.

Business Insider reported that Baird ruled out moving the Cahill Expressway, the road and rail corridor, which chops right through the CBD and Circular Quay and has long been condemned for being a tad on the ugly side, saying such a move would cost “billions of dollars”.

An artist’s impression of the Circular Quay upgrade.

Designs for Circular Quay wharf upgrades are not yet finalised, but one option being considered is double-storey wharves with new retail facilities.

Construction is expected to begin in 2019.

Images: Business Insider Australia

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Latest comments

Ben says:
September 29, 2015 at 4:36 pm
Agree with Trevor – If I owned some investment properties (hotels in the city) and I wanted to upgrade my house (the wharf), I would borrow the money and use the revenue from the investment properties to pay off the loan over time. Sometime in the future the loan would be paid off and I would still own the investment properties.
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Trevor says:
September 29, 2015 at 1:17 pm
This seems to me a false economy…surely better to maintain ownership of the properties and dedicate the revenue streams to the renewal of Circular Quay.
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