Luxury high rise empire faces collapse over dispute

Apartment developer Crown Group is facing an uncertain future after a falling-out between the two founders of the business that boasts a $5bn pipeline of projects in Sydney and Brisbane.

Artist's impression of Crown Group’s Mastery project

Luxury apartment developer Crown Group is facing an uncertain future after a falling-out between the two founders of the business that boasts a $5bn pipeline of projects.

Crown chief executive Paul Sathio has lodged a winding up application in the New South Wales Supreme Court against the company after a reported breakdown in relations with fellow founder Iwan Sunitio. The dispute threatens the completion of several apartment projects in Brisbane and Sydney worth more than $1bn.

Mr Sunito told The Australian on Tuesday that Mr Sathio had been his business partner for 25 years and Mr Sathio had launched the legal action.

“It’s really sad,” Mr Sunito said.

Founded in 1996 by Mr Sunito, an architect, and Mr Sathio, an engineer by profession, Crown has completed apartment, hotel and retail developments across the world.

The winding up notice was lodged with the NSW Supreme Court earlier this month through Mr Sathio’s company PNR International. A directions hearing is set down for Wednesday.

The action reportedly came to a head over authority to pay loans and other bills accrued by the company. Comment has been sought from Mr Sunito and Mr Sathio. Ms Sathio’s lawyer Lousia Tan declined to comment.

According to Crown Group’s most recent financial report lodged with ASIC, the company made an after tax loss of $7.8m in 2021 compared with a profit of $24.6m in 2020.

Turnover dropped to $51.4m from $354.9m during the period as no new projects were completed during that financial year.

In their directors’ report to ASIC, Mr Sunito and Mr Sathio said that while settlements were down on the previous year, sales remained “relatively strong given the challenging environment.”

Artist's impression of Waterloo, Mastery – a Crown Group project.

One of the group’s subsidiaries Crown W48, which is developing Australia’s first Japanese-themed residential community in Sydney’s Waterloo, is now in the hands of a receiver with debts in excess of $90m.

The $520m Mastery project will house a total of 368 luxury apartments along with a 2177 square metre retail precinct with 27 stores and restaurants with a “carefully curated, authentic Japanese eat street.”

According to Crown W48 receiver and manager Costa Nicodemou, the company owes Hong Kong-based Ithaca Investment Holding $53.6m, secured by the property in Waterloo.

Crown’s projects over the years have not been without controversy. In 2019, the company’s high rise development in Brisbane’s West End had to be revamped after a barrage of criticism from residents about its height.

Opponents of the $350m “urban resort” claimed the initial 14-storey height of the apartment towers were above the 12-storey height limit for the area, there was not enough space between buildings and a lack of infrastructure to cope with the influx of residents.

The following year, the developer scrapped plans for mostly one-bedroom apartments targeting overseas investors at the project and decided to focus on two-bedroom apartments for local owner-occupiers in the wake of a changing property market due to Covid-19.

Crown in 2021 said its decision to push ahead with new projects was based on its belief that a slowdown in residential construction activity because of the current weakened market would create an undersupply of housing in the future.

Lisa Allen contributed to this article.

Luxury penthouses in the Mastery project.

Originally published as Luxury high rise empire faces collapse over dispute