Rising construction costs kill $165m Perth apartment tower

An international construction market report by consultants Turner and Townsend found Perth had leapfrogged the other major capital cities to become the most expensive in the country to undertake construction of any kind after a 14 percent average rise.

The survey found the average cost to build in Perth has increased to $US2822 ($4127) per sq m from $2142 in 2021, making it more expensive than Sydney ($2699), Melbourne ($2666), Brisbane ($2621) and Adelaide ($2454) .

28 Lyall was to be one of the tallest towers in Perth.

This week, veteran Perth housing developer Nigel Satterley said construction costs were still rising 1 per cent every month, and predicted it would take six months for the “cyclone” to abate.

Sirona Urban, owned by former Grant Samuel director Matthew McNeilly and his wife Tonia, a Perth real estate agent, blamed an unprecedented 30 per cent rise in Perth construction costs over the past 10 months, delays in construction timelines, and a shortage of tradespeople for the decision to ax the project.

Mr McNeilly said buyers’ deposits plus interest (where applicable) would be returned as soon as possible.

“We will be writing to our buyers individually to inform about the decision and refund, and I will speak personally to as many as I can. They deserve to hear from me directly about the decision we’ve made,” Mr McNeilly said.

“No one foresaw the effects of COVID on the supply chain for building materials, which has resulted in costs increasing by up to 30 percent.”

Five months ago, Mr McNeilly appeared unconcerned about rising construction costs, touting the revamped project’s luxury attributes in an advertorial published in The West Australian.

“We’ve had a fantastic sales response, especially now that we’re about to start construction and pricing will increase for the remaining apartments,” Mr McNeilly said.

For development partner Chip Eng Seng, it won’t be the first project it has mothballed in Australia since the start of the pandemic.

In May 2020, the developer canceled plans for a new Hyatt hotel in Adelaide, and an ambitious apartment project in Melbourne citing “weakened economic conditions and a plunge in consumer sentiment”.

The developer operates locally through CEL Australia.

Leave a Comment

Your email address will not be published.