CORNERSTONE Partners Group is mulling over selling or leasing the commercial office spaces at YOTEL Melbourne, the company’s maiden property development project in Australia. Its chief executive officer and co-founder Jason Chong said as the project is still in the preliminary development stages, the company is still studying the options.
This Includes forecasting the economic, political and social market factors that would significantly influence the prices, marketability or leasing prospects of the new commercial development, Chong told NST Property.
“We are keeping our options open for now as we still have ample time in strategising our business plan for this project... We do not want to rush for a hasty decision to ensure we maximise the ultimate return to our shareholders. But it may likely lean towards retaining the office component ourselves for potential en-bloc divestment if the right offer comes along,” he said.
YOTEL Melbourne is set to be a one-stop centre that houses restaurants, creative co-working spaces and bespoke corporate office spaces in Southbank.
The 30-storey tower comprises a hotel and offices, totaling 15,538 sq m (sqm) in gross development area, with an estimated gross development value of RM420 million.
Chong said the commercial office spaces are about 6,400sqm (42 per cent of the overall space) and hotel component, around 9,000sqm (58 per cent).
The mix development, which is 100 per cent owned and developed by Cornerstone, is located on 63-69 of City Road in Southbank, Melbourne.
Cornerstone acquired the site from two individual sellers at the end of last year, at about A$20 million, he said.
The site is within a walking distance from the Crown Melbourne, Southbank Promenade, Arts Precinct, Federation Square, as well as surrounded by other world-class entertainment outlets, amenities and renowned education institutions, he said.
The 244-room hotel is slated to open in 2022. It occupies 23 floors in YOTEL Melbourne, from Level 7 to 29.
“It is conceptualised to take the essential elements of luxury hotels in smaller yet smartly-designed spaces, as well as deliver a sense of community equipped with areas for co-working, social gatherings and wellness.”
The hotel will be operated by YOTEL with which Cornerstone inked the Hotel Management Agreement (HMA) last month.
Chong said the HMA is for 15 years and extendable by two subsequent terms of five years at mutual concurrence.
Designed by renowned CHT Architects, the hotel will feature YOTEL’s latest generation of cabins all equipped with a SmartBed.
Its signature KOMYUNITI spaces are designed with areas for co-working, informal meetings, relaxing and socialising, serving up everything from flat whites by British specialty roaster Workshop Coffee to signature cocktails on the outdoor terrace.
“Being the effective owner of the asset, which includes land and building, Cornerstone is responsible for monitoring the performance of YOTEL, recommending the hotelier on the business direction and managing the group’s own equity holders’ stake in the investment to realise superior shareholder value.
“For YOTEL, its management services actually started even before the hotel opens. It is responsible for technical services (consultation) on the interior design and layout of the hotel, essential components and facilities that add value to the hotel services, and recommended resolutions to the technical issues, among others,” he said.
YOTEL is also responsible in the pre-opening service that is targeted to kick in about a year before the real opening (expected in mid-2021). This includes the hiring of general manager, preparation of operations budget, and marketing planning leading up to the launch, said Chong.
In terms of room rates, Chong said tentatively, the stabilised average daily room rate is estimated to be at A$180 per night.
“YOTEL, being an experienced international hotel operator, is adopting dynamic pricing to fully capitalise on market conditions to ensure the average daily room rate is kept competitive.”