[+] Frasers Swaps Probuild for Crookes as Mega-Project Costs Rise

Frasers Property, the developers behind a mega urban-renewal project on Sydney’s north shore, says it was forced to sign a “significantly” more expensive contract with another builder after administrators for Probuild walked away. The new contract to build a four-tower, mixed-use apartment complex as part of the first phase of Frasers Property Australia’s Macquarie Park development, went to major Sydney-based and family-owned builder Richard Crookes Constructions. But coupled with soaring construction costs, the new contract is likely to see Frasers’ budget for the decade-long development balloon by tens of millions of dollars. Construction on what is known as Soul Residences—the second residential tower development of the project’s initial phase—was contracted to Probuild and began in November last year. But within three months, Probuild had gone bust . “We have had a few hurdles to overcome on this site,” Frasers Property Australia development director Scott Clohessy told The Urban Developer . “We had Probuild building Soul [Residences] previously and then they went into administration. Our team worked very hard to find an alternative after working with the administrators, who basically said they were not proceeding with the job.” Frasers signed with Richard Crookes to take over building Soul Residences on March 23—about a month after Probuild collapsed. “Yes, it was lightning quick,” Clohessy said. “Which had an impact to our budget and building program for Soul. They basically quoted again from scratch.” ▲ A render of the residents’ courtyard at Soul Residences. Clohessy would not be drawn on the size of the cost increase but described it as significant. “It is a significant impact on Frasers, but to be fair that is the risks you take as a developer. It’s not good for anyone in the industry.” Frasers, along with community housing provider Mission Australia, won the right to redevelop the 8.2ha Ivanhoe Estate in Macquarie Park in 2017. The masterplan for the community, to be known as Midtown MacPark, includes 3300 apartments, a proposed school and childcare, a new central park, pocket parks and playgrounds, a community centre, pool and gymnasium. The total cost of development was a reported $2.2 billion. But Clohessy says construction costs for Midtown MacPark have increased significantly. “I think each demographic is slightly different, I think it depends on the type of product we are building and the materials we use, but our product here at midtown has risen about 6 to 7 per cent,” he said. “We have obviously shared some of the risk with Richard Crookes as part of the deal to sign them up and we are currently looking at our procurement strategy for future stages with the current market situation with builders and ourselves. “We haven’t landed on the best way to deal with it yet, but we are trying to work with our preferred [contractors] on the best strategy.” The project’s first building—a 24-storey, 269-apartment residential tower—is about 97 per cent sold and is expected to be completed later this year. Soul Residences, with its four towers of up to 20 storeys, will include 130 apartments—capped under affordable housing legislation—as well as 259 social housing apartments across two buildings. ▲ A render of the view from one of the apartments in Soul Apartments. Also known as community housing, ownership of those apartments remains with the NSW government but will be managed and maintained under Frasers Property’s deal with Mission Australia. Soul Residences, expected to be completed early 2024, will also include 103 one, two and three-bedroom apartments to sell. Clohessy said sales have been good, with just 31 units remaining. Two of the four, four-bedroom townhouses between each of the towers have also sold, reportedly for about $2.2 million each. Frasers is hoping to fast-track a development approval, now before the NSW government’s Department of Planning and Environment, for stage two of the project. That will allow them to build the road network for the whole project and add another 650 apartments. But it will also include community infrastructure like a large park in the middle of the site, a community centre, pool and gymnasium. “It’s really the key to kicking off the community infrastructure and we are trying to fast-track it because that is what is going to bring this community together, we need that mixed-use element, we need that common draw card for people to come here and enjoy living here,” Clohessy said. The developer is hoping re-opened borders and returning international students will kick-start sales of those new apartments, which have just been released to market. Macquarie University is about 500m away. “We make sure we provide a mix of product and target a diverse range of people, basically to capture the whole market,” he said. “We are not solely after foreign investors and international students, but they are one portion of the market that we are definitely targeting.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Frasers Swaps Probuild for Crookes as Mega-Project Costs Rise

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