Crown’s planned $2bn Melbourne tower stalls

Crown’s planned $2bn Melbourne tower stalls

8 March 2019

James Packer-backed casino giant Crown Resorts has been forced to rethink its plans for a site in Melbourne’s Southbank where it hoped to build Australia’s tallest skyscraper, after the Victorian government refused to extend the development permit, says The Age.

In a blow to its long-held ambitions, Crown told investors on Monday the Victorian Planning Minister Richard Wynne had informally rejected the request to alter approvals given two years ago to Crown and its joint-venture partner, Schiavello Group, for the $1.75 billion, 90-storey project One Queensbridge Tower.

The decision means Crown Resorts will now need to obtain fresh planning approval for the massive Queensbridge luxury hotel and apartment complex in Southbank should it wish to proceed with it.

Mr Wynne controversially used his special powers to greenlight the $1.75 billion development in March 2017, despite strong opposition from Melbourne City Council. Crown’s proposal was more than three times greater than planning rules for the site had allowed.

Critics at the time described the approval as a “free kick” for Crown but Premier Daniel Andrews justified the behind-closed-doors approval on the basis that the project was of “state significance”.

The Age reported at the time that Melbourne City Council’s former chair of finance, Stephen Mayne, who is now an anti-gambling campaigner, said it was a disgrace Crown’s tower was ever approved.

“It was a dark day for planning in Victoria and it should now not be renewed in any way, shape or form – it was worse than anything ‘Mr Skyscraper’ Matthew Guy did [as planning minister], because it was a corporate sweetheart deal negotiated personally between James Packer and Daniel Andrews.”

Mr Mayne said Mr Wynne had personally not liked the tower plan, but had approved it out of Cabinet solidarity.

Located opposite from the casino, One Queensbridge was to be 323 metres high—half a metre taller than Australia’s tallest building, Q1 on the Gold Coast and 26 metres taller than the nearby Eureka Tower.

The project was to include 708 residential apartments and a six-star hotel.

Crown has consistently said the project was subject to obtaining financial arrangements that were “satisfactory to Crown and Schiavello”.

“Unfortunately, these arrangements could not be achieved before the construction commencement date,” Crown Resorts said.

“Crown retains a 50 per cent ownership interest in the land and will consider its next steps for the property in conjunction with Schiavello”.

Last year chief financial officer Ken Barton indicated that the venture had struggled to secure partners willing to share the risk of the residential element of the project.

The luxury unit market is plunging and a raft of new hotel openings has driven a softening in room rates, making the project harder to stack up, said The Australian.

The property is expected to be kept on ice until the next apartment cycle with industry sources suggesting Crown Resorts will eventually seek to push ahead with a project as apartments in its $2.2bn casino, hotel and residential complex in Sydney’s Barangaroo were selling well.

Some of the biggest residential developers in the central Melbourne market have been struggling to sell out their projects in the past year, notes the AFR.

Faced with headwinds in the sector, at least five major apartment developments in Melbourne have opted to exit their projects, which have then been taken over for office development, such as at 555 Collins Street and the La Trobe Street home of the Australian Federal Police, now in control of Mirvac.

That trend prompted speculation that Crown and its partner may yet return to the planning authorities with a revised proposal which includes more office space in the tower.