Shangri-La Melbourne fit-out stalls as 2026 opening looks increasingly unlikely

The long-vacant Shangri-La hotel tower in Melbourne’s east end appears no closer to opening, casting fresh doubt over previous expectations the five-star venue would welcome guests in 2026.

Despite last year’s update that the long-delayed project at 308 Exhibition St was nearing the “tail end” of its fit-out phase, there remains no visible activity at the site, with CBD News observing no workers entering or exiting the building in recent weeks.

A company representative has now confirmed there is no new timeline available, telling CBD News that “we have no further updates to share regarding Shangri-La Melbourne at this time.”

The 61-storey tower, built alongside the 59-level Sapphire by the Gardens residential building and linked by a skybridge, was completed in September 2022. But more than three years later, the hotel component remains dark, unoccupied and unfinished, despite being promoted as Melbourne’s first Shangri-La and a major luxury addition to the city’s accommodation market.

In March last year, CBD News reported that developer S P Setia was planning for the hotel to be fitted out and operational by 2026, with around 500 rooms and extensive function and dining facilities, including a grand ballroom with a 2500-person capacity, a health club, spa and skybridge restaurants and bars.

At the time, Setia (Melbourne) Development Co Pty Ltd director See Hunt Soon told Malaysian finance outlet The Edge that the company was “at the tail end of finalising the fit-out with the contractor”, after delays caused by COVID-19 shutdowns and escalating construction and material costs.

However, with 2026 now here and no discernible works under way, residents say the prolonged inactivity has become a symbol of wasted potential at a sensitive gateway between the CBD and Carlton Gardens.

President of CBD residents’ group EastEnders, Dr Stan Capp, said the ongoing vacancy was “disappointing” and raised broader questions about how governments ensure major projects deliver what they promise.

“It’s disappointing that we’ve got what’s reputed to be a five-star hotel that’s now into its fourth year of vacancy with little sign that anything’s changing,” Dr Capp said. “It just seems a wasted resource for our city.”

Dr Capp said the location was also contentious from the outset due to its proximity to the Royal Exhibition Building and Carlton Gardens precinct, but added that with the tower now built, the focus had shifted to the impacts of leaving such a large asset idle.

“Makes a bit of a nonsense of the planning laws if you agree to all this stuff and then nothing happens,” he said.

CBD News understands there have also been regular issues with people trespassing inside the vacant building, raising safety and security concerns for nearby residents.

The continuing dormancy comes amid renewed scrutiny of so-called “ghost towers” across the municipality. In March last year, sibling publication Southbank News reported on a fully constructed but empty apartment building in Southbank and cited estimates that the City of Melbourne is home to thousands of inactive dwellings. Planning Industry Foundation data from 2025 estimated there were more than 4400 inactive dwellings across the municipality.

The Minister for Planning has been contacted for comment, including questions about how governments can better ensure developments reach fruition, whether incentives or penalties exist when projects fail to deliver their stated objectives, what tax penalties apply to a building of this scale remaining vacant, and whether the state would consider reforms to support interim uses for long-empty sites.

For now, the future of Melbourne’s first Shangri-La remains uncertain, with the tower still looming over Exhibition St as a prominent reminder of a project that has yet to open its doors. •