Carlton hotel at centre of COVID-19 outbreak for sale vacant

The 1762 square metre Capital City zoned block (outlined), less than a kilometre to the top of Melbourne’s CBD, could make way for an 18-storey building.

One of the hotels at the centre of Melbourne’s coronavirus spike has been listed for sale vacant after a deal last July fell through.

Rydges on Swanston at 701 Swanston Street, Carlton, opposite Lincoln Square, is expected to trade for more than $40 million – about the same guide attached to it last year.

The Carlton site was marketed with this concept plan for a c11-storey building. In fact the zoning allows for something seven floors higher.

The inn last month made headlines when it was revealed COVID-19 infected guests who had returned from overseas and were supposed to be in quarantine for a fortnight were instead allowed to move between rooms, have visitors or leave the building – creating community clusters spread from the privately employed security contractors which shared common areas, like lifts.

Given the hotel is still tenanted to the government, prospective buyers won’t be able to inspect it.

Colliers International’s Oliver Hay, Guy Wells and Trent Hobart with Jones Real Estate’s Paul Jones, Tim Spargo and Sam Guest are the marketing agents.

“We are anticipating interest from a broad range of buyer groups given the corner position, uninterrupted park views and overall flexibility of the asset coupled with the underlying Melbourne market fundamentals,” Mr Hay said.

“The addition of the soon to be completed Parkville train station only a couple of hundred metres away will further enhance the connectivity and popularity of the location”.

The listing comes a week after we reported Allianz Real Estate spent $459m on two Carlton student accommodation complexes – one which has just replaced the former CFMEU’s headquarters, a 1388 sqm holding at 500 Swanston Street.

In May, Japan’s NTT Group paid $72m for a seven level, 7912 sqm office with ground floor retail at 200 Victoria Street, also in the suburb.

Seven months ago the Australian Red Cross sold University of Melbourne low-rise offices on a 2039 sqm plot, also opposite Lincoln Square, for $46m (story continues below).

Rydges on Swanston is offered by Adelaide-based Prime Hotels owner, investor and developer David Horbelt, who has held it since 1997.

Rydges on Swanston site

The five-level, five-star 107-suite guesthouse was once the tallest building on the block.

It has been operated recently by ASX-listed Event and Hospitality Entertainment, which also holds the brands Atura and QT Hotels, and Thredbo Resort.

At the north west corner of Lincoln Square North, the 1762 square metre Carlton site is zoned Capital City and could make way for an 18-floor structure.

Upper levels would capture views over the gardens to the Melbourne CBD less than a kilometre away.

The agents expect interest from groups within the student accommodation, office, medical, aged care, residential and education sectors – the property being close to University of Melbourne and Royal Melbourne Institute of Technology.

Other hoteliers are also anticipated to consider it – either for occupation or investment.

Mr Jones said the existing improvement would return net annual rent of about $3m. On that basis, Rydges on Swanston is expected to trade on a sub 7.5pc market yield.

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco