09/01/2008 - 22:00

Contexx pulls out of Capital Square

09/01/2008 - 22:00

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The Melbourne-based builder behind Perth’s iconic $1.3 billion Capital Square apartment development on the former Emu Brewery site, Contexx Pty Ltd, has pulled out of the project, leaving developer Saville Australia to negotiate a new contract.

Contexx pulls out of Capital Square

The Melbourne-based builder behind Perth’s iconic $1.3 billion Capital Square apartment development on the former Emu Brewery site, Contexx Pty Ltd, has pulled out of the project, leaving developer Saville Australia to negotiate a new contract.

Saville has confirmed to WA Business News it has appointed builder John Holland to commence the forward works on the 41-storey River Plaza tower in the interim, “to allow negotiations with a builder to come to fruition.”

Rising construction costs, and labour shortages in Western Australia, are thought to have contributed to the demise of the contract between Contexx and joint venture partners Saville and Babcock & Brown.

Saville said it was in discussions with other parties in relation to building Capital Square, including John Holland and Leighton. It also revealed it had commenced a feasibility study into developing a commercial office tower on the 18,000 square metre riverfront site.

Contexx was announced as the project builder in June last year, and was touted by Saville as one of only a handful of builders around Australia capable of undertaking a project of Capital Square’s calibre.

Saville’s original plan features three high-rise towers of between 41 and 48-storeys, containing more than 1,000 apartments and 10,000sqm of commercial office and retail space.

“There has been no decision made in relation to Towers Two and Three at Capital Square, however given the shortage of office space in the city, a commercial/office tower option is undergoing feasibility and consideration.

“Our DA [development application] however, still allows us to do three towers,” the company said.

Saville said John Holland would commence forward works on the stage one tower shortly and did not anticipate any delays to the entire project, which is due for completion in 2011.

Capital Square was to be the first WA project for Contexx, which is headed up by former Multiplex national directors Simon Gray and Noel Henderson.

The builder was scheduled to begin forward works last September and complete the first tower at the end of 2010, while commencing construction of the second and third towers progressively over the period.

It is understood there are few builders left which would have the capacity to take on the project, among them are John Holland, Multiplex, Mirvac, AbiGroup, Melbourne-based Grocon, and Queensland’s Hutchinson Builders.

Other large builders looking for a greater slice of the WA market include Probuild, which is working on the One40William project and Raine Square builder, Salta Properties.

Master Builders Association of WA executive director Michael McLean said moving west was not the easiest transition to make for some eastern states builders, but those able to bring skilled labour with them were at an advantage.

 “Because the market is so hot at the moment, builders need to weigh up whether they can deliver projects on time, and on budget. Record volume does not necessarily equate to profit.”

The MBA is forecasting construction cost hikes in WA of between 10 per cent and 12 per cent across the board this year.

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