Ribbon Hotel, Sydney, 2019

Private development and construction group Grocon has set the top end of the Sydney hotel market alight after reportedly choosing a heavyweight Chinese consortium to buy the $700 million hotel it has proposed on the site of the IMAX cinema at Darling Harbour.

The sale of The Ribbon is rumoured to be close to being finalised and would mark the largest ever sale of a single hotel property in Australia. It has generated excitement as it is being struck at a benchmark that may lift the value of hospitality properties across the country.

The impending deal’s closure also reinforces the rise in hotel values on the back of a surge in Chinese investment, which came into question as two major hotel portfolio sales — that of M&L Hospitality and the Ascendas Hospitality Trust — were called off this month.

The bid by the mainland grouping, which on some accounts was partly orchestrated by Grocon chairman and construction scion Daniel Grollo, also validates Grocon’s decision to run a proposal for a five-star hotel in tandem with the option of developing a next generation office complex.

Grocon’s planned redevelopment of the IMAX into a six-star W Hotel and luxury serviced apartments, along with a revamp of the theatre, drew extensive international interest, and even compelling bids from local players, with the Chinese mainland grouping believed to have seen off another Asian player that was also short-listed in February. The hotel and serviced residences were marketed on Grocon’s behalf by Craig Collins and Simon Storry of JLL and Dean Dransfield of consultants Dransfield Hotels and Resorts.

Grocon refused to comment yesterday but its plans have evolved from building a landmark office tower to the likely construction of one of the world’s most iconic W Hotels.

The proposed building, the 402-room hotel and 159 one, two, three and four-bedroom apartments known as The Ribbon Hotel and Residences, reflects the site constraints while the elevated overpass is interpreted as a twisted ribbon.

The hotel will benefit from the NSW government’s overhaul of the 20ha Darling Harbour entertainment precinct, with Grocon’s 23-level building to also include retail and a cinema complex on the 31 Wheat Road site. Grocon’s success came as Singapore’s Kum family scrapped its mooted $1.5 billion sale of the bulk of its M&L Hospitality hotels portfolio, despite receiving hefty offers for its key properties.

These include one of Sydney’s largest hotels, the Four Points by Sheraton Sydney, which is being overhauled into a major hotel and office complex.

The 2089-room M&L portfolio also included the Travelodge Docklands in Melbourne, the Hilton Auckland, Christchurch’s Chateau on the Park, and Sydney’s Swissotel.

That process ended in the same week that the rival Ascendas Hospitality Trust, which has a hotel portfolio across the region that is valued at $1.4bn, was also taken off the market. While this left heavyweight investors disappointed, property executives said a hostile move may be unlikely.