‘Pulled the pin’: Macquarie Place apartments axed

Macquarie Place, artist impression.

An $80m luxury apartment development in Hobart will not be going ahead.

And it’s not a lack of sales or trouble with council approvals that have torpedoed the project.

Instead, it’s the cost of construction in the southernmost capital city.

A year ago, Macquarie Place was launched to market, a multi-level residential building that would transform the former Motors Holden dealership into 56 apartments, alongside ground-level commercial spaces.

It was very well-received, with buyers purchasing their new home off-the-plan, including three of four penthouses selling for $3m each and about 40 per cent of the stage one apartments sold within weeks.

The team behind the development — Macquarie Street Investment directors Paul Huggins, Momentum Group, and Marcus Birrell, former owner of the Holden dealership — said everything from design to sales to funding to council approval all lined up perfectly. But unexpected construction cost blowouts have sunk the project.

MORE: Massive inquiry for $80m Macquarie Place ahead of launch

One third of Macquarie Place homes have already sold

Artist impression of the Macquarie Place apartments.

Mr Huggins said they had engaged a number of construction companies, but the price to build was well above the independent quantity surveyor reports.

“It’s very disappointing. We have never had a failed project ever,” he said.

“But some items were 200 to 300 times more expensive than what was quoted on the QS report just three months ago.

“The price of windows was double the QS report. Demolition was two-and-a-half times higher. Concrete was 250 per cent more than expected. Plaster was 200 per cent higher. Joinery, cabinetry and stone were 500 per cent higher.

“Ultimately, the construction was going to cost 30 per cent more than it should have.

“We might have been able to get the price down by 10 per cent, but not by 30. So we had to pull the pin on it. It’s a blowout of over $13m.

“This is a wider issue than just our project, and just Hobart, but it makes you wonder how anything will ever be built.”

MORE: Strong single bid secures Mornington industrial site

Eco-tourism gem springs onto market

Paul Huggins, Momentum Group. Picture: Supplied

Mr Huggins said ultimately, the home buyers have been left high and dry.

“It’s also disappointing for the people who were making plans to move into these homes,” he said.

“They will have their deposit refunded, but still, extremely disappointing.”

The building was set to be demolished this month. Instead, the owners are now looking to pivot to using the site in a completely different way.

Although the lease is not yet signed, Mr Huggins said they were in talks with an electric vehicle company about returning the property to a dealership showroom.

The landmark Motors building in Macquarie Street, Hobart.

Hobart Lord Mayor Anna Reynolds said she was sad to hear the news about the Macquarie Place project and more broadly about a number of residential approvals not moving to construction stage.

“This is why I am moving a motion on this issue at our next Council meeting,” she said.

Ms Reynolds’ Notice of Motion proposes ways to encourage residential development — potentially with incentive packages or rate and fees incentives — in central Hobart.

It will be discussed and voted on at Council’s meeting on Monday.

Research by Council officers shows 669 approved but undeveloped dwellings in Hobart over the past 10 years.

The post ‘Pulled the pin’: Macquarie Place apartments axed appeared first on realestate.com.au.