Australia’s tallest apartment project stops paying its bills
Australia’s property sector troubles have deepened, putting the future of the country’s tallest residential development in question, after developer Beulah International put the project manager of its high-profile Sth Bank project into voluntary administration.
Pitcher Partners’ David Vasudevan and Lindsay Bainbridge were appointed administrators of BSSPV Pty Ltd after architecture firms Cox Architecture and UN Studio – designers of the $2.7 billion twin-tower project in Melbourne – lodged wind-up orders against it.
Details of the project’s debts were not immediately clear, but corporate records show engineering services company Stantec in November lodged notice of an outstanding invoice for $35,000 against the company.
Early construction works were due to begin early this year on the garden-edged project comprising a 365-metre, 102-storey tower and a second rising 295 metres, or 63 storeys on the former site of a BMW dealership at 58 Southbank Boulevard, but work has not started.
Malaysian-backed Beulah paid $101 million for the 6191-square-metre site.
Construction cost estimates had nearly doubled since the project began and the decision to put the project manager into administration would buy time to try and secure extra construction financing, Beulah director Jiaheng Chan said.
“This is not a situation we wanted to find ourselves in, but our project is not immune to the cost rises and challenges faced by the broader property market,” Mr Chan said.
“Despite our best efforts and those of our partners and creditors, we failed to achieve a target by early 2024 that would have seen us activate construction finance at that time. We have now made the difficult decision to place the project management entity into voluntary administration to have additional time to secure finance and allow progress on the project.”
The profile of Sth Bank by Beulah, which in November 2023 said it had sold 80 per cent of its 700-plus off-the-plan apartments, has faded as soaring construction costs have rendered increasingly unviable projects designed and conceived in a time of lower interest rates and buoyant demand.
In 2022 the developer sold a sub-penthouse in the project for $35 million, eclipsing that a year later with the sale of another one for $38 million. It had appointed Multiplex as builder.
But Tuesday’s news adds the special purpose vehicle to a growing pile of construction industry corporate wrecks.
Insolvency appointment data published by corporate regulator ASIC this week show 1943 construction industry insolvencies for the financial year to January 26, a 24 per cent increase on the same period a year earlier.
Developers on Tuesday were quick to warn that more failures were likely, criticising Victorian government charges on foreign and local buyers for raising the costs of projects and saying that efforts to support commercial property development, such as attempts to speed up planning processes and making stamp duty concessions were not enough.
“The Victorian development industry is facing the toughest conditions in decades, in no small part due to years of the government’s tin ear,” said developer Maxwell Shifman, the chief executive of Intrapac Property.
“The whole housing industry is impacted, but the apartment sector is particularly vulnerable.”
