More than two years after it was placed in receivership, Brisbane's Clem7 tunnel has been sold to Queensland Motorways for $618 million - a fraction of the $3 billion it cost to build.
The sale is seen as a barometer for likely interest in Sydney's Cross City Tunnel, which was placed in receivership two weeks ago for the second time in eight years.
Bringing to a close a long process, receiver KordaMentha on Friday selected Queensland Motorways ahead of three other consortiums including one led by UBS Infrastructure Fund to buy the Clem7.
Queensland Motorways, which is owned by the state-owned Queensland Investment Corporation, controls most of Brisbane's toll roads including Legacy Way, which makes the Clem7 tunnel a good fit with the rest of its network.
RiverCity Motorway, the previous owner of the tunnel under the Brisbane River, was placed in receivership in February 2011 owing $1.34 million to lenders, less than a year after the tunnel opened.
In striking parallels with other failed public-private projects such as Sydney's Cross City and Lane Cove tunnels, the Brisbane tunnel failed to attract anywhere near the number of motorists that were forecast.
That was despite RiverCity using almost every means possible, including slashing tolls, to entice motorists to use the tunnel named after a former Brisbane lord mayor, Clem Jones.
Analysts had expected the tunnel to sell for less than $650 million.
The 6.8-kilometre tollway includes a 4.8-kilometre tunnel linking roads on each side of the Brisbane River.
Queensland Motorways chief executive Brendan Bourke said the deal positioned it to further consolidate the Brisbane toll road network. The sale is expected to be completed within the next three months.
It comes as a tight deadline of October 9 is set for parties to lodge their expressions of interest for the 2.1-kilometre Cross City Tunnel. Top of the list of interested parties is Transurban, which has an extensive network of toll roads in Sydney including the M5, M7 and Eastern Distributor.
Transurban has the balance sheet strength to buy the tunnel without having to resort to an equity raising.
Operational toll roads are more enticing to large investors than green field infrastructure projects because they can make their investment case on the basis of actual traffic figures rather than forecasts.
"We'd expect to see a lot of large investors interested in the Cross City Tunnel ... but the price will be significantly less than what the original investors chipped in," Legg Mason investment analyst Andrew Chambers said.
Brisbane's $4.8 billion Airport Link toll road is also likely to be put on the auction block over the next year after its operator, Brisconnections, was placed in receivership in February.
It was also a casualty of a model based on overly ambitious traffic forecasts.