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This was published 5 years ago
Rooms without a view: Packer claims to be duped on Barangaroo vista
It's a classic Sydney property dilemma: Claims that the NSW government has sold the same view of the Harbour Bridge and Opera House twice are about to be tested in court.
The view buyers that claim to have been effectively duped are James Packer’s Crown Resorts and one of the country’s largest property developers, Lendlease.
A view from Pyrmont of Crown Casino being constructed at Barangaroo.Credit: Dominic Lorrimer
Both are trying to injunct the NSW government’s Barangaroo Delivery Authority (BDA) from allowing other developers to increase the height and density of projects adjacent to Crown and Lendlease and impede the view they say they have already paid for.
They say the BDA is attempting to raise more money for the NSW government. The way Crown and Lendlease describe it, the BDA has engaged in a bit of view-based bait and switch.
Lendlease and Crown have been in negotiations with the BDA for more than two years over sight lines and both say they have given ground. Yet the only thing they seem to agree on is that they are miles away from agreement.
Ultimately Crown and Lend Lease believe they have a legal right to the views, and the BDA says these two only get a right to be consulted.
Compromised view: James Packer and Crown's executive chairman, John Alexander.
How much is a 99-year view?
The timing comes as no surprise. Crown and Lend Lease are looking to injunct the imminent lodgement by BDA of a planning application for the neighbouring Central Barangaroo precinct.
What is not clear is exactly what the financial cost would be to either Lend Lease - which has residential planned as part of its development - or Crown Resorts, whose hotel views will be impacted.
The Crown tower will be 71 levels high, with levels 6 to 22 housing the hotel. Consensus is that around 20 per cent of the rooms will have an affected aspect. These rooms won’t attract rates as high as those with iconic views and with a 99-year lease this adds up. Calculating the net present value of a 99-year view of the Opera House will be fascinating.
Even if it is substantial, it’s hard to imagine that this would be a commercial tipping point for Crown’s Barangaroo project.
Packer requires two elements of his development to carry its viability. Crown Barangaroo needs the casino as a draw card and a cash cow, and it needs the residential apartments to repay him around $800 million of the $2.2 billion cost of development.
Crown at Barangaroo won’t have pokies and won’t cater to the lower end of the mass market.
It will be looking to the wealthy Asian market to both bet and buy apartments.
VIPs return
Down in Melbourne, Crown’s executive chairman, John Alexander, was on Thursday delivering far more commercially important news to the company’s shareholders.
The Chinese VIP players that Crown lost a couple of years back following the arrests of 18 staff by the Chinese government are starting to return.
They are not back at the pre China-raid levels. In 2016, Crown made $65.1 billion in VIP turnover and this number fell to $33 billion in the immediate wake of the raids. In the 2018 financial year, it was up to $51.5 billion.
But the better-than-expected rebound in offshore VIP numbers is a positive harbinger for Sydney which will open its doors in three years.