The NSW government’s drive to divest itself of its assets has taken further tangible form. It has announced that the historic Lands and Education Department buildings, which stand adjacent to each other in Sydney’s financial district, will be leased out to a Singapore property developer to become a 240 room luxury hotel.

NSW Minister for Finance, Services and Property Dominic Perrottet has announced Singapore’s Pontiac Land Group as the winner of a competitive tender process for a 99 year lease of on the two buildings. Pontiac will pay $35 million for the lease, which is conditional on a commitment to undertake an estimated $250 to $300 million refurbishment of the properties, expected to take three years. The government will vacate the buildings by 2018.

Pontiac typically develops hotels that are then branded and managed by leading hotel chains. In Singapore, for example, its properties include the Ritz-Carlton, Regent, and Conrad Hotels. The company is owned by the Kwee brothers, two of Singapore’s richest men.

The Lands Department building was built by the NSW colonial government in the late 19th century. It was designed by government architect James Barnet in the Renaissance Revival style popular at the time. It has been continuously occupied by the Lands Department, in its various forms, since being opened in 1892. It is currently occupied by the Department of Planning and Infrastructure.

When it was built it was Sydney’s largest building, covering a whole city block. Its grandest façade faces Bridge St, the major east-west thoroughfare in the northern part of Sydney’s CBD. The building includes a 61 metre clock tower with a copper-covered onion dome, and has a ‘Datum Bench Mark Plug’ set into position on the front of the building, which originally provided the origin of all survey levels in NSW.

The 8,815 square metre building was earmarked by the NSW government in the 1980s for possible conversion to Sydney’s first casino, which led to the NSW Heritage Council placing a permanent conservation order over the building to protect it from unsympathetic development. The NSW Department of Environment calls it “one of the most influential and major public buildings in Australia’s colonial history.”

The Education Department Building is almost as impressive. It was built in the baroque style and designed by George McRae, who also designed the Queen Victoria Building and Sydney’s Central Railway Station. It opened in 1914.

The two buildings are leading examples of Sydney’s historic government ‘sandstones’. Others include the GPO (also designed by James Barnet, which was sold by Australia Post in 1996 and became the Westin Hotel) and the Treasury Building further up Bridge St, which dates from 1849 and is now the Intercontinental Hotel.

“This is great news for NSW, with a 240-room luxury hotel to be built in Sydney’s tourism and financial hub,” said Mr Perrottet. “It means hundreds of new construction and hospitality jobs, and an estimated $185 million boost to the NSW economy over 20 years.

“This flagship hotel is all about making smarter use of our property assets. Proceeds from the lease will be reinvested in infrastructure, and there will be substantial savings to NSW taxpayers on avoided maintenance. Importantly, these iconic heritage assets will be enjoyed by locals, tourists and visitors, rather than just being used as offices for bureaucrats.”

Pontiac Land Managing Director Kwee Liong Keng said: “We are delighted with this rare opportunity to convert the historic Sandstone buildings into one of the finest luxury hotels in the world and a new benchmark for hotels and hospitality in Australia.

“Our approach to the project is guided by strong principles, including respecting and celebrating the sandstones’ heritage and legacy, opening them up for visitors and locals, enhancing the surrounding public realm, and serving as long-term stewards of these treasured buildings,” Mr Kwee said.

Mr Perrottet said the buildings are subject to the highest level of statutory heritage protection in NSW. Under the proposal, Government Property NSW retains custodianship, and will oversee the transformation during the development approval and construction phases.