Lendlease, Mitsubishi Estate buy luxury twin tower project One Circular Quay for $800m

Australian property giant Lendlease (ASX: LLC) has formed a joint venture with one of the largest Japanese real estate developers to buy a twin tower luxury residential and hotel project in Sydney’s Circular Quay.

Called One Circular Quay, the development is currently under construction on the former Gold Fields House site and will comprise a 59-level residential tower and a second tower developed as a 220-room luxury hotel.

Expected for completion in FY27, the development will have an end value of approximately $3 billion.

Lendlease’s JV partner is Mitsubishi Estate - a leading Japanese real estate company and a spinoff of car manufacturer Mitsubishi. The company has its main real estate footprint in the Marunouchi district in central Tokyo where it has been operating for more than 120 years.

As part of the deal, Mitsubishi Estate’s holding in One Circular Quay will increase from 19.9 per cent to 66.7 per cent, while Lendlease will own the remaining 33.3 per cent of the JV.

“The acquisition of One Circular Quay is consistent with our objective of replenishing the Australian development pipeline and working with investment partners to improve return on invested capital,” Lendlease global CEO and managing director Tony Lombardo said.

According to architecture firm Crone which designed the hotel tower in collaboration with Kengo Kuma and Associates (KKAA), the development will become “one of Australia’s most luxurious destinations”.

“Combining local sandstone, cascading green walls and large windows with Harbour views, the vegetation along these pixelated terraces will soften the appearance of hard edges creating a connection to First Fleet Park opposite the building,” Crone said.

“The design prioritises the public realm and everyday experience, creating a pedestrian gateway to Sydney’s business district, unlocking a new cultural and creative precinct and transforming Circular Quay.

“The design promotes Sydney’s diversity, climate and lifestyle and is destined to become part of Sydney’s heritage in the future.”

As part of the JV, Lendlease will receive an acquisition fee on settlement, earn development management and construction management fees, equity returns on its capital and potentially performance fees.