This article is from the Australian Property Journal archive
The syndicate developing the world’s tallest residential skyscraper Eureka Tower yesterday signaled it may sue Grocon Construction group.
The $500 million Eureka Tower is some 12 months behind its construction schedule. Due to a number of construction delays, including industrial action, it is believed a series of sales have been voided due to existing contract sunset clauses.
In an exclusive interview with propertyreview.com.au, solicitor and joint developer Benni Aroni yesterday said some parts of the Tower are behind schedule, but some have actually been completed ahead of schedule.
“Final completion may be up to 12 months behind,” Aroni told.
However, when questioned about legal action against Grocon, Aroni would not rule out legal action once Eureka Tower is completed.
“I cannot answer that at this stage, it would be a matter for review once the project is completed.”
Grocon is the family owned construction group of Daniel Grollo. He is also part of the syndicate developing Eureka.
Three of Australia’s most prominent new apartment buildings Eureka Tower, Australand’s Freshwater Place and Lend Lease’s Dock 5 are all struggling to find buyers many years after being launched.
All three high profile apartment towers within Melbourne’s inner city were launched as long as five years ago yet each of the buildings have hundreds of apartments still for sale.
Launched half a decade ago, Eureka Tower is reported to have around 132 apartments still up for grabs with new sales now competing with resales, Australand’s Freshwater Place is reported to have around 220 expensive apartments for sale and there are still several hundred apartments for sale at Dock 5 within Melbourne’s Docklands.
Adding to the woes of the developers of these landmark residential towers are the ongoing Court battles involving other apartment developers including Mirvac, MAB and Morry Schwartz’s Pan Urban group. Each of these developers are in legal brawls with buyers alleging they bought apartments after being given misleading information.
And more Court battles appear to be on the horizon with more than 3000 apartments due to settle in 2006.
“The apartment market in Melbourne is a real mess at the moment,” one leading real estate agent told propertyreview.com.au yesterday. “The greatest problem facing the market is hysteria over quality, receding valuations and falling prices.”
“If you add to that confusion the bad press has caused to the marketplace by the legal stoushes and the alleged deceptive conduct by developers then you have a real mire.”
Most valuers and agents agree that Dock 5, Eureka Tower and Freshwater Place all are “premium” long term purchases, especially for owner occupiers, however, each of these developments still have a long way to go in their sales programs with the developers now having entered a tricky stage where their existing sales are competing against resales often being sold off at below the “off-the-plan” sales price.
Making matters even worse for the Melbourne marketplace is the host of developers who are adding gimmicks to try and sell apartments.
Concept Blue, at the former Victorian Police headquarters in Russell Street, is leading the giveaway pack offering potential buyers free stamp duty plus a 6% rental guarantee.
Meanwhile, buyers at Dock 5 are being offered whitegoods packages and no body corporate fees for fixed periods.
“It’s going to take the highrise apartment market at least another 12 month, possibly two years, to at least clear the backlog of stock. There is no doubt many developers will have to sell apartments for less than their list prices otherwise we may be in the same situation in a year’s time,” the St Kilda Road agent concluded.
By Nelson Yap
