Property Development

Crown’s $1.75b tower a victim of the property downturn

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Written by The ReReport
As seen in the Source link, written by commercialrealestate.com.au on 2019-03-05 03:38:20

James Packer’s Crown Resorts’ plan to build the nation’s tallest tower, a $1.75 billion hotel and apartment complex opposite the casino in Melbourne, is in limbo after failing to secure finance ahead of a key planning deadline.

The state government refused to grant Crown and its joint venture partner Schiavello an extension to its planning approval, which expired on March 2. Under the approval granted in 2017, the joint venture had two years to begin developing the Southbank landmark before the permit expired.

On Monday, Crown said the joint venture had applied in late February for an extension to the construction commencement date and had since been notified by the state government that the request was denied.

“The project was subject to obtaining financing arrangements that were satisfactory to Crown and Schiavello,” Crown said.

“Unfortunately these arrangements could not be achieved before the construction commencement date under the planning approval.

“Crown retains a 50 per cent ownership interest in the land and will consider the next steps for the property in conjunction with Schiavello.”

Melbourne’s slowing CBD apartment market has already been blamed as one potential handbrake on the project, which combines both a six-star hotel with 388 rooms and 708 residential apartments.

Last year chief financial officer Ken Barton indicated that the venture had struggled to secure partners willing to share the risk of the residential element of the project.

Some of the biggest residential developers in the central Melbourne market have been struggling to sell out their projects in the past year.

Faced with headwinds in the sector, some players have opted to exit their projects, which have then been taken over for office development, such as at 555 Collins Street and the La Trobe Street home of the Australian Federal Police, now in control of Mirvac.

That trend prompted speculation that Crown and its partner may yet return to the planning authorities with a revised proposal which includes more office space in the tower.

The Crown project has courted controversy from the start. Approval for the 90-storey Southbank tower which includes a pedestrian bridge connecting the new hotel to the Crown Casino complex, took less than a year.

Planning minister Richard Wynne ruled the One Queensbridge project was one of state significance, exempting it from strict planning controls, after the developers committed $100 million towards a community benefits package.

State planners questioned elements of the $100 million package which, they said, would benefit Crown itself, according to documents obtained through Freedom of Information provisions.

Designed by London-based architects Wilkinson Eyre, One Queensbridge was to be taller than two other nearby Southbank towers, Australia 108, currently under construction, and the existing Eureka Tower. It is just low enough to fall below a 325.6-metre height limit imposed by air-traffic control restrictions.

At a plot ratio of 56 to one, the 200,000 sq m tower has more than three times the density under the maximum allowable plot ratio of 18:1 (18 metres of floor space for every metre on the ground). This was a measure put in place by Mr Wynne to prevent inappropriate development.