M Docklands Peppers Capital Alliance EDITED

Property developers operating within the crowded Melbourne apartment market are increasingly designing projects incorporating luxury hotels to differentiate their offering.

The trend is being heralded as a ‘win-win’ for developers, who are looking to activate sites and create a point of difference, as well as hotel groups who gain rare access to high-quality inner city development sites.

A Melbourne based developer that was a pioneer of the resurgence of this development model applying for the first hotel and residential development permit of this scale back in 2013,Capital Alliance Investment Group, says it has been “blown away” by the renewed interest in these developments.

In early 2013 the group launched its M Docklands project – a 19 level residential tower that will be home to the Docklands first five-star hotel, Peppers – signalling a major shift from the previous development model that integrated serviced apartments with residential developments.

Located on the concourse of Etihad Stadium, the $140million development is set to open in the first quarter of 2016 and will house 186 residential apartments, 11 retail lots and a five-star hotel from levels two to six operated by Mantra Group, under its luxury Peppers brand.

Capital Alliance Managing Director and Founder, Mohan Du, has seen these partnerships work well overseas and believes that Melbourne’s market conditions are perfectly suited for more developments of this type.

“Many of the hotels around the world, particularly in busy metropolitan centres like New York and Singapore, have buildings that successfully integrate luxury hotels with residential apartments,” Du said.

“If you look at the situation in Melbourne projected demand for hotel rooms is expected to significantly increase in the short to medium term with severely limited development space available to facilitate a supply of new rooms.

“By partnering with a well-respected hotel group like Mantra I can ensure that my development is being utilised in the most effective, financially viable and productive way possible.”

Dean Minett who runs the hotel-consulting group that coordinated discussions between Mantra and Capital Alliance, Minett Consulting, agrees that there are advantages for both hotel groups and high-rise developers to work together.

“Having a five-star hotel incorporated into your building, and all of the amenity and luxury associated with that, is a great selling point for the property,” Minett said.

“A five-star hotel activates the site for the developer and generates a real level of excitement about the building.

Minett also said there were a number of advantages for hotel groups who were looking to partner with developers.

“Not having to source planning approvals or oversee the construction of a purpose-built hotel is a positive, especially if the site is well located in a premium location like the Docklands,” he said.

With so much interest already generated by M Docklands Mohan has flagged his intention to continue working with hotel groups on future developments.

“I’m committed to incorporating a hotel component into all future projects wherever possible,” Du said.

“We’ve already had strong interest from hotel groups to work with us on our next project at Harbour Town which is a really good sign that there is an appetite for more projects of this type here in Australia.”

James Wilkinson

Editor-In-Chief, Hotel Management