Developer Gurner has acquired a trophy site on the doorstep of Barangaroo and Sydney Harbour to develop into a $800 million, 34-storey two-tower luxury property.

The 1,195sqm site at 189 Kent Street adjoins the Barangaroo precinct and currently houses a commercial office tower that was built in the 1960s, with current tenancies in place that Gurner will hold until completion of leases.

The Kent Street acquisition represents the first seed site to have capital deployed within the developer’s $2 billion Build-to-Sell (BTS) development fund, which is backed by a global institutional investor.

The site has recently been granted planning approval for a residential development after a lengthy approval process by the site’s vendor Barana Group, who has held the asset since 2002.

This is the second transaction Gurner and Barana Group have completed together after developing St Kilda’s former Novotel site into their Saint Moritz project.

The acquisition forms part of a larger strategy for Gurner, which is expanding its significant $10 billion national pipeline of both build-to-sell and build-to-rent assets across Australia.

The site has an existing approval in place for two towers, ground-floor retail, restaurants and bars, a health and wellness component, and basement carparking.

The developer will now be seeking small amendments to the approval to reduce the number of apartments and increase the amenity provisions, in line with its vision for the site.

Architect FJC Studio has been appointed as architect, having won a competitive design competition between local and international architects.

The deal was brokered by Justin Brown, Tim Rees and Ben Wicks of CBRE.

“Kent Street represents one of the most prestigious development sites in Sydney; from the moment we were introduced to the site we knew we had to acquire it and do something very special in a market that is crying out for ultra-luxury stock,” Gurner Group CEO Tim Gurner said.

“We’re certainly across the challenges the development industry is currently facing in regards to construction and interest rates. We’ve taken a conservative view to pricing and feasibility and feel supremely confident on the fundamentals of this site and its success.

“We have been watching the market very carefully for 18-24 months waiting for the right time to utilise the capital we have at our disposal, waiting for great opportunities knowing we can act quickly for the right sites, with a particular eye on Sydney and Melbourne. We also know there are different factors at play in Sydney – lack of affordability, scarcity of quality product and depth of the luxury market – that make it far more capable of withstanding the current economic headwinds, so it’s for this reason that we are very confident in the Sydney market and remain bullish on residential property in this blue chip city.

“Across other states it’s the construction and labour costs that are putting pressure on projects, which is why we see Sydney as such a strong opportunity with its higher price-per-square-metre average, motivated buyer pool and sought-after postcodes for offshore and local buyers. Sydney is a very unique market with an incredibly low amount of supply and an even smaller opportunity to acquire great sites with harbour views, it is even rarer to be able to transact on a site that also has planning approval ready to go.”