Buyers stuck in contracts for ambitious skyscraper that isn’t being built

Madelyn McGhie put down a $130,00 deposit for an apartment with her partner in 2023. (ABC News: Jesse Thompson) Apartment-buyers who bought into ambitious plans for Australia's tallest building say they face up to a decade of uncertainty after the project faltered. The project south of Melbourne's CBD collected deposits under decade-long contracts before sector-wide feasibility problems put its future in doubt. Receivers are now selling the project site, but developer BEULAH says the project could still proceed with a new partner. Link copiedShareShare articleThe property development group behind spectacular plans for the tallest skyscraper in Australia solicited new apartment buyers while part of the project was facing significant cashflow issues that later put its future in doubt. Dubbed a "community among the clouds" that would rise to 365 metres, the STH BNK project development was pitched as a vertical city that would offer residents metropolitan conveniences without having to leave their front door. But the project was jeopardised by escalating costs after hundreds of millions of dollars' worth of off-the-plan contracts with 10-year sunset clauses were signed. The ABC understands deposits for about 540 contracts together worth $650 million remain locked in an interest-earning trust account while options to revive the project are explored. "I don't think it's fair. We've put our money down for a building that's not being built," off-the-plan purchaser Madelyn McGhie said. Madelyn McGhie labelled a referral scheme promoted to existing purchasers as "predatory". (ABC News: Jesse Thompson) Ms McGhie, who put down a $130,000 deposit with her partner in 2023, is among several buyers who told the ABC they wanted their deposits released in the absence of a guarantee that the building would go ahead. The ABC has also seen evidence of a referral program promoted to existing purchasers around the time that the project's development arm was incurring debts that later saw it enter administration. It's unclear if anyone participated in the program, and any deposits taken would be protected in a trust, but Ms McGhie labelled the scheme "predatory" given the signs of financial trouble at the time it was launched. "You've already got people invested," she said. "You want them to refer friends and family with word of mouth — which is a very strong referral technique — because you want to hit a certain sales quota to potentially secure finance, when you're already in trouble delivering on the project." The development was pitched as a vertical city that would offer residents metropolitan conveniences without having to leave their front door. (ABC News: Jesse Thompson) Property development group BEULAH declined to be interviewed and did not directly answer a question asking if the referral program was a bid to make its project more viable. "This is not a situation we wanted to find ourselves in, but our project is not immune to the market challenges faced across Melbourne," BEULAH said in a statement. "We remain focused on working with stakeholders to deliver a positive outcome for all involved." The project reported an 80 per cent sale rate after it went to market with a polished publicity campaign in April 2022. A global design competition had produced the building's unique twisting design, which was granted government planning approval in 2020 and showcased in events connecting buyers to the project's creative minds. Influential brands were attached: Four Seasons would tenant a second, shorter tower, while Paris's Centre Pompidou would be involved in a dedicated cultural space. There were grand plans for the building, with Four Seasons to tenant a second, shorter tower. (Supplied: BEULAH) Tony Penna from the Southbank Residents Association addressed the Melbourne city council meeting where the plans were first discussed. He recalled believing the project would transform the dense array of office and apartment buildings south of the Yarra River. "We felt that it would become the heart of Southbank — possibly even the soul of Southbank — because of the amenity being offered in this development," he said. The project was showcased in events connecting buyers to the project's creative minds. (Supplied: BEULAH) But development figures say the head-turning design elements that powered the project's marketing campaign made it especially vulnerable to the uncertainty to come. Intrapac's Max Shifman, who was the head of the Urban Development Institute of Australia through part of this period, said the entire sector was caught out by rising material costs and productivity issues. But on an especially tall and elaborate building, he said the gap between what the apartments were sold for — said to range from $534,000 to a $38 million sub-penthouse apartment — and what they later cost to build would threaten to topple the project. Max Shifman described the situation as a "stalemate." (ABC News: Jesse

Buyers stuck in contracts for ambitious skyscraper that isn’t being built

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