Melbourne’s tallest building project faces strife as manager taps out

The developer behind plans for the nation’s tallest building is trying to find a backer, despite the project management company of the $2bn Southbank skyscraper falling into administration.

An artist’s impression of the Southbank skyscraper. Malaysian-backed developer Beulah International is chasing a deep-pocketed partner to back its vision for one of the nation’s largest ever mixed-use schemes.

The developer behind plans to build the nation’s tallest building in Melbourne is trying to find a capital backer, despite the project management company of the $2bn Southbank skyscraper falling into administration.

Malaysian-backed developer Beulah International is chasing a deep-pocketed partner to back its vision for one of the nation’s largest ever mixed-use schemes, as it looks to defy the harsh climate for new projects in Victoria.

The company has plans for a striking mixed-use project including luxury apartments, a five-star hotel, offices and top amenities, but voluntary administrators Pitcher Partners were called into project management company BSSPV Pty Ltd on Tuesday.

This followed moves by architecture firms Cox Architecture and UN Studio, which designed STH BNK by Beulah, last month losing a winding-up order against BSSPV. The case was due to be heard later this month in the Victorian Supreme Court.

Pitcher Partners insolvency experts David Vasudevan and Lindsay Bainbridge are handling the administration but declined to comment.

Building was slated to begin on the STH BNK by Beulah in 2023, with the twin towers as high as 366m to loom over Melbourne’s city skyline.

But Beulah International’s ambitious project was hit by rising building costs and poor timing for residential projects in Melbourne, even though it had record pre-sales including a $35m sub-penthouse, as Victoria has been slugged by high taxes and sliding property prices.

The scale of the scheme, its ­location and the multifaceted ­nature also made it hard to stack up in the present environment, with some expecting a smaller project to eventually emerge.

An artist’s impression of the world's highest vertical garden to be built in the $2bn Southbank skyscraper.

But Beulah International remains keen to get its project off the ground and is starting a search for a capital partner to get started separately from the project manager’s administration.

Beulah International is understood to have tapped JLL’s Josh Rutman and Jesse Radisich to run a process to find a partner. This could range from a passive partner leaving the scheme to the existing developer to a more active player looking for a joint venture.

The developer may also consider selling or carving up the site if a buyer chased what is one of the last available Southbank development parcels.

Beulah International bought part of the site for the STH BNK by Beulah project in 2017 and then expanded it in 2021.

BSSPV was set up by Beulah to provide planning and design for STH BNK, and was put into voluntary administration, following what it called “unexpected delays in the progress of the project”.

Beulah director Jiaheng Chan said the decision to put BSSPV Pty Ltd into voluntary administration was made “to allow additional time to progress the project, which is already 80 per cent sold”.

“This is not a situation we wanted to find ourselves in, but our project is not immune to the market challenges faced across Melbourne,” Mr Chan said.

“Despite our best efforts and those of our partners and creditors, we failed to achieve a target by early 2024 that would have seen us activate construction finance at that time.

“We have now made the decision to place the project management entity into voluntary administration while we pursue an alternative strategy to realise the STH BNK project.”

JLL is working with consultants KPMG on seeking proposals from parties locally and in Asia for potential equity commitments.

STH BNK has been billed as a city within a city. It is slated to have 710 apartments, a Four Seasons hotel with 216 rooms, 86 Four Seasons private residences, top shopping and wellness areas, as well as a world-famous Centre Pompidou from Paris.

The project’s Residential East Tower has had strong pre-sales amounting to more than $700m and it could be built as part of a first stage this year. Multiplex was involved in the project as an early contractor but has not been part of the project for 12 months.

Beulah has indicated that a term sheet had been exchanged with a preferred contractor, comprising a major local builder and an international construction conglomerate. It is first working on the mixed-use West Tower.

The site was backed by Malaysian lenders and local finance house Payton, which confirmed it had a very small exposure to the project via the landowning entity – which is not in administration.

Payton has been working closely with the borrower via enhanced monitoring in respect of its capital strategy, which includes the JLL process to pursue a recapitalisation or sale.

The loan was written before HMC Capital bought Payton Capital last year, and the position is indemnified.

Originally published as Melbourne’s tallest building project faces strife as manager taps out