Sammut Group says some luxury Gold Coast projects will stall

Sammut Group founder Allen Sammut has warned of ‘carnage’ on the Gold Coast as some projects will fail to come out of the ground despite stabilising building costs.

Sammut Group chief executive Allen Sammut has warned of forthcoming “carnage” on the Gold Coast as projects fail to come out of the ground – but some relief is on the horizon with building costs stabilising.

The Sydney-based developer said the market had changed considerably since the last 2020 and 2021 explosion of luxury projects on the coast in response to strong lifestyle demand from southern buyers, which saw some developers go to market without approvals.

Now, the market is moderating.

“FOMO (fear of missing out) has gone,” Mr Sammut said. “There's no urgency from the buyers any more … and there is a bit of hesitancy about buying off the plan now.”

“There’s going to be a lot of projects that will not get a start. It’s not a boom-bust scenario up here, it’s not prices dropping. It’s not a crash in the market, or anything else, it’s just a feasibility thing.”

Julian and Allen Sammut at the COAST Gold Coast site.

Speaking last week while on the Gold Coast for the sod turning for the $200m luxury residential project called COAST, the father-son development team is full steam ahead on the project despite originally forecasted returns eroding against rousing construction costs.

“(Starting construction) is a good thing for the Gold Coast, considering how much carnage and how many proposed developments are not going to happen,” he said.

However, pulling the plug on the project or going back to buyers to ask for more funds was never an option.

Only a handful of the 53 apartments within the tower are still available, with the project breaking records at launch by achieving an average apartment price of $5.25m. Not only did it appeal to the local owner-occupier cohort, but also buyers from Toorak in Melbourne, New Zealand, and Sydney’s eastern suburbs, Northern Beaches and Sutherland Shire wanting a second home.

Renders of Sammut Group's COAST residential tower on the Gold Coast.

Sammut’s chief operating officer Julian Sammut said their partnership with Multiplex would ensure their vision will be executed to a high quality in the under-supplied market.

“There’s definitely a shortage for good quality, residential-only stock,” the younger Mr Sammut said.

“There are no holiday rentals, it’s purely residential. (It will) have all the most opulent amenities throughout the building. We want to make sure that everyone feels like they’re in a five-star luxury residence every time.”

Another benefit for developers on the Gold Coast is construction costs have now stabilised, according to the senior Mr Sammut, and he expects a further relaxation next year.

While this is a good thing for the industry, the shortage in apartments hitting the market will likely place further pressure on housing affordability at a time when buyers borrowing capacity has been reduced due to rises in interest rates.

Renders of Sammut Group's COAST residential tower on the Gold Coast.

“I think that's a good thing so people can actually forecast their project because for the past six months, no one has been able to forecast where it was going to land,” Mr Sammut said.

“As more and more jobs do not start, then obviously I think there will be a price relaxation in construction costs, which could see some of these other apartments reignite.”

Demand for off-the-plan has also carried through to Sammut’s Vue project in the Sydney suburb of Cronulla, which saw 40 per cent of stock sell on launch night this month.

Residents within the COAST tower will have access to a 32m wet edge pool that wraps from the east to north, a yoga studio, massage rooms and sauna, function facilities, residential beach bar, breakout areas and a commercial-sized gym. A concierge will also manage premium services such as home cleaning, restaurant bookings, airport transfers, dry cleaning, car washing, entertainment bookings and food delivery.