Developer Beulah International is working to reassure buyers and secure additional funding to ensure its $2.7 billion Sth Bnk development, set to become Australia’s tallest residential project, stays on track.
On Tuesday, Beulah placed the Sth Bnk project management company into voluntary administration. By Wednesday, the company had started contacting purchasers and assured them of continued engagement as the project progresses.
Despite the recent setbacks, Beulah’s conveyancing lawyer, Nick Holuigue from Maddocks, reported no requests for refunds from buyers. “We haven’t had anyone approach us along those lines,” Holuigue said in response to inquiries from The Australian Financial Review. “We are sitting on a huge volume of sales they have achieved despite challenging market conditions in recent years.”
However, Beulah, which first made a name for itself in Melbourne’s development scene a decade ago with the Australia 108 high-rise, now faces the task of attracting new investors to fund the ambitious Sth Bnk project. Market sources indicate the project’s cost could balloon to $1.5 billion, representing a 40% increase from earlier estimates.
In addition to securing fresh capital, Beulah must restore confidence in the local construction industry to ensure it can meet its financial obligations. The decision to place the special purpose vehicle into administration follows a wind-up notice filed by the project’s architects, Cox Architecture and UN Studio, in the Supreme Court of Victoria. Corporate records also reveal an outstanding invoice for $35,000 to engineering services company Stantec.
Construction, originally slated to begin in 2020, was delayed until last year. As of Wednesday, the site—located at 58 Southbank Boulevard, a former BMW dealership Beulah acquired for $101 million in 2017—remains quiet, with only hoarding marking the planned development. Beulah is in the process of applying for a demolition permit for the existing structure.
In late 2023, Beulah announced that 80% of the 700-plus apartments in the development had already been sold. However, since then, progress updates have been scarce as the company grapples with rising financing and construction costs, a challenge faced by developers globally.
Developers in Victoria have cited macroeconomic factors such as foreign buyer surcharges as exacerbating the situation. Beulah has reportedly approached large local developers, including Lendlease, to discuss potential collaborations and secure vital capital, though these talks have not yet led to success.
To lower costs, Beulah has been revising the project’s design, removing some of the six planned basement levels, which would have been costly to construct, and relocating more car parks to the building’s podium.
In an effort to secure funding, Beulah is now reaching out to Asian investors interested in the Australian housing market. JLL will lead a roadshow to several Asian cities next month, with KPMG advising on the efforts to secure both equity and debt funding. Beulah is also engaging with local non-bank lenders to explore debt options.
However, one significant hurdle remains: the project’s size and complexity. The “green spine” development features a 365-meter, 102-storey tower, along with a second, 295-meter, 63-storey structure. The taller tower would surpass the nearby Australia 108 in height, while the smaller tower would feature commercial offices, a hotel, restaurants, and bars. The construction of such a high-rise requires tailored solutions, adding significant risks that potential funders will need to be convinced can be managed.
“The construction costs are higher, it’s massive, and there are technical challenges,” a financier familiar with the project said. “The availability of money is not the issue. It’s proving they can overcome these challenges.”
Reactions to the project’s future remain divided. Some insiders express skepticism, citing concerns about the departure of key architects and unresolved fee issues. “If your architects are chasing fees and you cut that arm off, how do you expect them to reappear?” one person remarked.
On the other hand, some remain hopeful. “I wouldn’t write it off,” one source said. “These projects are highly complex, but Beulah is working hard to overcome the challenges.”
Beulah’s co-founders, Adelene Teh and Jiaheng Chan, were not available for comment on Wednesday. A company spokeswoman reiterated that the project is moving forward, with purchaser deposits held in a trust. “Beulah remains committed to the development,” she said.
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