Retail investors in Australian Unity’s $500 million select income fund are set to take a loss on a half-built apartment project in inner-eastern Melbourne after delays pushed up costs and prompted the fund manager to sell, rather than put more money into, the troubled project.

Investors in the 1 Studley Park Road, Kew, project were not willing to pay an extra $7 million to engage a second builder and complete the topped-out 10-storey building after contractor Multiciv was removed from the job, Australian Unity’s general manager of mortgages Roy Prasad said.