This article is from the Australian Property Journal archive
THE future of Crown Resorts and Schiavello Group’s $1.75 billion proposal to build Australia’s tallest building is up in the air.
The JV partners have yesterday confirmed that their One Queensbridge project has failed to obtain an extension from the Victorian government.
As previously reported by Australian Property Journal, the JV partners had sought to extend the planning permit for the $1.75 billion project, however Planning Minister Richard Wynne rejected it on the grounds that Crown did not provide sufficient reasons to justify an extension of time.
The JV partners had argued the project was subject to obtaining financing, and they have yet to secure “arrangements that were satisfactory.”
“Unfortunately these arrangements could not be achieved before the construction commencement date under the planning approval,” Crown said in a statement.
Crown said it has been “informally notified by the Victorian government that an extension to the construction commencement date for the proposed One Queensbridge project has been denied.”
Despite strong opposition from Melbourne City Council and the project going against the government’s own planning controls, the project was given the green light in February 2017 in a controversial back-room planning process, which the government defended by touting the economic benefits.
The government’s planning controls restricted the height of a development which borders the site to a maximum of 18 storeys. Crown gained approval for a 90-storey 323 metres tower.
It would have become Australia’s tallest building comprising a 388-room six-star hotel, 708 apartments, a restaurant and lounge at the top of the tower. The new hotel would have further cemented Crown’s position as one of the largest hoteliers in Melbourne, with over 2,000 rooms.
The failed extension is only the latest hurdle faced by Crown, which has had difficulties since gaining the permit to obtain funding for the project.
Crown yesterday said it is weighing up its options. It is unclear whether the JV partners will continue to pursue the current proposal, redesign the project or abandon it altogether.
“Crown retains a 50% ownership interest in the land and will consider the next steps for the property in conjunction with Schiavello.”
In 2014, Crown bought a stake in the four adjoining land parcels opposite the Crown Melbourne complex from Schiavello for $50 million. Prior to Crown purchasing a stake, Schiavello had originally proposed to develop a $1 billion apartment, five-star hotel and office development.
The failure to get One Queensbridge off the ground adds to the building and construction industry’s woes in Melbourne. In October last year, Multiplex’s regional managing director Graham Cottam warned that work is drying up.
Cottam said it was harder to get projects started because the banks were not lending and the plot ratio for developments were tight so developers can’t get the same square meterage for sites.
In an interview with Australian Property Journal last year, Malaysian group SP Setia’s Australian CEO Choong Kai Wai also said not many projects have gotten off the ground in Melbourne.
“Every year Melbourne needs to develop around 5,000 apartments. But many developers cannot get the loans from the banks. It is not easy to get funding,”
Choong said SP Setia’s $565 million Sapphire By The Gardens project, which sold 95% of apartments, was funded by Japan’s Sumitomo Mitsui Banking Corporation. He added that it was a six months process to secure funding.
“We borrowed from a foreign bank, in this case it was a Japanese bank, Sumitomo Bank,”
“Of course, we hope to do more projects in Melbourne, but the land costs have gone up, construction costs have gone up, property prices didn’t go up as much.
“We have to make a return… its not easy, but we have to look for a development that gives us a good return.” Choong said.
Australian Property Journal
