The storm has intensified for the owners of Queen’s Wharf as massive cost blowouts continue to dog the megaproject.
The mixed-use development in the heart of Brisbane hit the headlines again this week as news broke apartment contracts for the 800-unit project had been cancelled.
At the same time, the operator of the wider Queen’s Wharf development and casino, The Star Entertainment Group, continues to face collapse.
A Queen’s Wharf Residences spokesperson said that co-owners Far East Consortium and Hong Kong-based diamond dealer Chow Tai Fook had experienced “unheralded cost increases and supply chains”.
Costs for the project have reportedly skyrocketed by an estimated $1 billion from 2015 when the joint venture, then including The Star Entertainment Group, agreed to develop Queen’s Wharf for $2.6 billion.
The spokesperson said that the conglomerate was seeking a 12.5 per cent price increase on the apartments, which according to Queen’s Wharf Tower website, ranged from $585,000 to $6.7 million.
According to project marketers YPM Group, 90 per cent were sold within the first four weeks of launch in 2022.
The conglomerate was maintaining the initial deposit so there was no upfront costs to existing purchasers, and extending the time to completion, the spokesperson said.
A reported 445 buyers have resigned at a higher price after Queen’s Wharf Residences advised buyers of the change in December, leaving nearly half of buyers awaiting the return of their deposit.
“We are arranging refunds of the deposits to any buyers who wish not to proceed,” a Queens’s Wharf Residential spokesperson told The Urban Developer.
“In addition to this we are paying the buyer any interest earned on the investment of the deposit, in line with banking requirements, this can take at least 30 days to redeem the investment.
“We are aware of other developers who in the current climate have found themselves increasing prices or not proceeding with the project.”
The spokesperson emphasised that The Star has no investment in the residential towers at Queen’s Wharf.
“In order to help understand and, to the extent possible mitigate cost increases, Far East Consortium and Chow Tai Fook have established their own construction company for the purpose of delivering Queen’s Wharf Tower,” they said.
“FEC Constructions, with its recent success at Perth Hub, brings proven expertise to this major project, ensuring a continuation of the quality and standards.”
Construction continues with the Queen’s Wharf Tower basement expected to reach ground level in the second quarter of this year.
Meanwhile, The Star Entertainment Group’s lenders are reportedly being prepared for a potential voluntary administration this week.
Quarterly reports released on January 20 show that for the second quarter of its financial year to 31 December 2024, revenues declined 15 per cent to $299 million, with an EBITDA loss of $8 million, an improvement on the $18 million loss from the previous quarter.
According to a statement to the ASX, “ongoing challenging consumer environment, the impact of mandatory carded play and cash limits in NSW, and costs associated with ongoing remediation activities” were to blame.
“Given the reduction in the Group’s available cash..and ongoing financial and liquidity challenges, the Company and its directors continue to seek external advice in respect of their duties,” the statement said, which would include reliance on safe harbour provisions under the Corporations Act, which protects directors from insolvent trading liabilities under certain circumstances,” it said.
“There remains ‘material uncertainty’ as to the Group’s ability to continue as a going concern.”
