Buyers of Draycon’s Boutique at Chevron Island fear contracts will be cancelled after work stalls
Buyers in a 15-storey development fear their contracts will be cancelled after work on yet another Gold Coast construction site stopped amid builder cash flow problems.
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Buyers in a 15-storey development fear their contracts will be cancelled after work on yet another Gold Coast construction site stopped amid builder cash flow problems.
Buyers in the 42-unit Boutique project at Chevron Island, under way by Sydney developer-builder Draycon, say little if any work had been done on the site this year, with little communication from the developer.
Many signed contracts for between $500,000 and $1.7 million in 2021 which are subject to sunset clauses, which allow the buyer or developer to terminate the contract if the build is not complete.
With the average unit price for Surfers Paradise increasing by more than 63 per cent in that time, the apartments could fetch the developer $20 million or more extra if resold at today’s prices.
Prices listed for two remaining apartments in the residents-only tower this week started at $1.01 million for two-bedroom and $2.5 million for a three-bedroom apartment.
The concerns come a week after work stopped amid a dispute between builder Tomkins and developer of the $100 million Midwater tower at Main Beach, where buyers signed $1 million-plus contracts in 2021.
Developer Heran Group has refused to rule out invoking sunset clauses on the 119 apartments, which are potentially worth $100 million or more above the value when contracts were signed.
Also at Main Beach, developer Andrews Group invoked the sunset clause for some multi million-dollar contracts in its ultra-luxury Dune project.
One off-plan Dune buyer, who signed up at $5.5 million but had their contract cancelled by the developer, said their apartment had since been back on the market from $8.5 million.
Despite leaving committed buyers in the lurch, it is entirely legal for pre-sales contracts to be terminated if a project has not been completed by the “sunset” date.
Recent Queensland Government changes to sunset clause laws only affect land purchases, with “reviews” to consider expanding to apartments not due for “one to two years”.
A buyer in Draycon’s Boutique said a lack of information from the developer made them fear their contracts were at risk.
The buyer signed a contract for $870,000 in 2021 and now believes the apartment is worth as much as $1.3 million.
“It was about market price when we purchased it, but we thought if we were living in it by the end of 2022 then it was a good deal,” he said.
After repeated delays in completion, the family sold a house in the suburbs in February this year after being told to get their finances ready for settlement. They’ve been sharing a small rented unit ever since.
“We’ve been in limbo for three years basically,” he said.
“There’s nothing we’re going to be able to do.
“At this point in time it’s not going to be finished by sunset clause date.”
For most apartments in Boutique, the sunset dates fall early next year.
“I don’t like to whinge but it’s a terrible feeling,” the buyer said.
“We’ve got to be out of this place by October, we don’t know if we’ll have to get a new lease – if it is ready we could be stuck paying rent and a mortgage or breaking a lease.
“We haven’t gone on holidays in two years because they kept saying ‘another three months’ and we thought it might be ready.
“We’ve put our whole life on hold, completely on hold.”
The situation has left the family struggling.
“It’s been a big pressure on our family, the close living quarters, the uncertainty – we feel helpless I guess,” he said.
“The developers have used our deposits and our time ... and we get nothing in return.”
Deposits are usually returned in the event a sunset clause is invoked.
Another couple, who planned to retire in the building, said they did not know what they’d do if their contract didn’t settle.
The pair signed up in 2021 for $840,000 and were told it would be completed in 18 months.
“When we purchased the price was at the top of the market and we were very nervous about the purchase as we were inputting everything we had into this purchase," she said.
“We sold our home in November 2023, to a young family, expecting completion of apartment in March 2024 – even taking less money to meet the new buyers’ price point.
“We have rented at a very high price for several months until very recently have moved in with family to try and save some money.
“If this apartment is not completed and the sunset clause is invoked we are now priced right out of the market and we will struggle to purchase anything.”
The situation has given the couple “stress, stress and more stress”.
“We do not know what we are going to do if this does not go ahead.”
Another buyer signed on in mid 2021 and was told in December last year that completion day would finally arrive by May 2024.
“It was a retirement unit for my wife and I,” he said.
“The delay and potential non-completion have now delayed our retirement plans as we are caught in no man’s land, can’t walk away without losing deposit, no guarantee it will complete and therefore can’t buy anywhere else – even if we could afford the 50 per cent increase in pricing.”
Sales agent Julian Sutherland of Sutherland Group has marketed Boutique, along with Draycon’s other projects La Isla at Southport and 23-unit development Salt Palm Beach, which has just broken ground.
Mr Sutherland said he did not have “authority from Draycon to make comments on their behalf”.
“You would need to contact them directly,” he said.
Neither Draycon nor managing director Howard Dabit responded to the Gold Coast Bulletin’s questions.
Buyers received an email from Mr Sutherland in May saying “construction cost escalations” had impacted the build and that the development company and its directors had effectively run out of cash.
“(There is) difficulty in obtaining the flow of funds from the bank to meet the monthly escalated payments required to keep the trades going at a sufficient pace,” the email said.
“Significant funds have had to be provided personally by the developer to keep the momentum of the project.
“These funds have now been exhausted and the developer is required to seek additional funding from the bank.”
The letter said buyers could expect to see increased activity on site from June after the financing arrangements had been made, with anticipated completion in October.
When the Bulletin visited the site on a sunny weekday, there were no visible workers, the crane was not running, and all Draycon signage and branding from the project had been removed.
Boutique’s development company is Alpha Chevron, which is directed by Draycon boss Mr Dabit, whose ASIC-registered name is Awad Dabit, as well as Robert Dabit, Carlos Youssef and Attallah Awad.The directors each hold shares in the company, with the Dabit brothers holding a majority between them.
In 2021 it said it had sold more than $15.9 million worth of units, almost a quarter of the stock, mostly to interstate buyers.
Draycon is behind completed developments at Southport, including the 74-unit tower formerly known as Adore on Queen St, now called La Isla Broadwater, which was delivered two years late after problems caused by the pandemic and the weather.
Builders had to do emergency repair work on a significant mould infestation before the 14-storey had even been finished.
The company debuted on the Gold Coast with Marquee on Meron, in which it initially sold 20 of the 51 units and leased the remainder.
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