This article is from the Australian Property Journal archive
GPT Group has pulled the plug on its proposed $600 million Newcastle renewal project because of a lack of commitment from the NSW Government.
GPT has been planning the project since 2007 and had proposed to redevelop three city blocks in Newcastle into a 3.5 level mixed use CBD retail, entertainment and leisure centre of approximately 55,000 sqm.
GPT also signed retailer David Jones to anchor the retail component with a 12,000 sqm department store and had has to develop 10,000 sqm – 12,000 sqm of office space as well as apartments.
However, yesterday CEO Michael Cameron expressed the group’s disappointment when he announced GPT will no longer proceed with the development and will instead move capital to other viable projects.
Cameron said a NSW Government Hunter Development Corporation Report released in March 2009 stated that Newcastle was in need of a commitment from government to invest in vital infrastructure in the city centre.
But he said a lack of commitment from the government to fully endorse the report and the renewal of the Newcastle city centre has led to GPT’s decision to exit its Newcastle land holdings.
“Without a multi-tiered approach to investing in the renewal of the Newcastle city centre, the city will never reach its potential. GPT’s $600 million proposed development was a key component of this revitalisation but we cannot make the transformation in isolation.
“GPT has been left with no other choice but to exit its investment in Newcastle,” he added.
David Jones CEO Paul Zahra said as a result of GPT’s decision, the retailer will exit its Newcastle CBD store when its lease expires on January 31 2011 after it signed an agreement to anchor the project in September 2008.
“We are disappointed that GPT’s Newcastle CBD redevelopment is not proceeding given we have traded in the area for more than 50 years.” Zahra said.
Cameron said whilst he understands the local community will be disappointed, he added that GPT had a responsibility to its investors and could not indefinitely support the carrying costs of the land holdings in Newcastle, which are dilutive to GPT’s earnings.
“We have reached the point where there are better alternative development opportunities,” he concluded.
Meanwhile GPT is on track to launch its $470 million redevelopment of Charlestown Square in region later this year.
The group has held Charlestown Square for over 30 years since it was constructed in 1979.
Australian Property Journal
