Buyers stuck in contracts for ambitious skyscraper that isn’t being built

The property development group behind spectacular plans for the tallest skyscraper in Australia solicited new apartment buyers while part of the project was facing significant cashflow issues that later put its future in doubt.

Dubbed a "community among the clouds" that would rise to 365 metres, the STH BNK project development was pitched as a vertical city that would offer residents metropolitan conveniences without having to leave their front door.

But the project was jeopardised by escalating costs after hundreds of millions of dollars' worth of off-the-plan contracts with 10-year sunset clauses were signed.

The ABC understands deposits for about 540 contracts together worth $650 million remain locked in an interest-earning trust account while options to revive the project are explored.

"I don't think it's fair. We've put our money down for a building that's not being built," off-the-plan purchaser Madelyn McGhie said.

Ms McGhie, who put down a $130,000 deposit with her partner in 2023, is among several buyers who told the ABC they wanted their deposits released in the absence of a guarantee that the building would go ahead.

The ABC has also seen evidence of a referral program promoted to existing purchasers around the time that the project's development arm was incurring debts that later saw it enter administration.

It's unclear if anyone participated in the program, and any deposits taken would be protected in a trust, but Ms McGhie labelled the scheme "predatory" given the signs of financial trouble at the time it was launched.

"You've already got people invested," she said.

"You want them to refer friends and family with word of mouth — which is a very strong referral technique — because you want to hit a certain sales quota to potentially secure finance, when you're already in trouble delivering on the project."

Property development group BEULAH declined to be interviewed and did not directly answer a question asking if the referral program was a bid to make its project more viable.

"This is not a situation we wanted to find ourselves in, but our project is not immune to the market challenges faced across Melbourne," BEULAH said in a statement.

"We remain focused on working with stakeholders to deliver a positive outcome for all involved."

Sector caught out by rising costs

The project reported an 80 per cent sale rate after it went to market with a polished publicity campaign in April 2022.

A global design competition had produced the building's unique twisting design, which was granted government planning approval in 2020 and showcased in events connecting buyers to the project's creative minds.

Influential brands were attached: Four Seasons would tenant a second, shorter tower, while Paris's Centre Pompidou would be involved in a dedicated cultural space.

Tony Penna from the Southbank Residents Association addressed the Melbourne city council meeting where the plans were first discussed.

He recalled believing the project would transform the dense array of office and apartment buildings south of the Yarra River.

"We felt that it would become the heart of Southbank — possibly even the soul of Southbank — because of the amenity being offered in this development," he said.

But development figures say the head-turning design elements that powered the project's marketing campaign made it especially vulnerable to the uncertainty to come.

Intrapac's Max Shifman, who was the head of the Urban Development Institute of Australia through part of this period, said the entire sector was caught out by rising material costs and productivity issues.

But on an especially tall and elaborate building, he said the gap between what the apartments were sold for — said to range from $534,000 to a $38 million sub-penthouse apartment — and what they later cost to build would threaten to topple the project.

"The latest estimates I saw, to actually build the building, were $2 billion," he said.

After being unveiled to much fanfare in 2023, the builder initially appointed — Multiplex — left the project more than two years ago.

"So you have this perfect storm where buyers have bought into these contracts with a 10-year sunset date, which means they essentially can't rescind the contract for 10 years from when they buy," Mr Shifman said.

"But the developers are also hamstrung, because they can't go back and renegotiate or cancel the contracts in circumstances where it's no longer feasible.

"It's a stalemate."

Program offered discounts for buyer referrals

Several buyers who spoke to the ABC said it could be difficult to get a clear update from BEULAH as promised construction timelines came and went.

When an investor named John Mibus paid a $71,000 deposit in February 2023, he said he was given an estimated building completion date of 2028.

The 10-year registration period was a requirement of the project's financial backers, he recalled being told.

But in winter 2024 — when the former car dealership that would host the site remain largely untouched — Mr Mibus contacted the sales team about growing social media chatter that the project was struggling financially.

Nearing 60, he was worried that the longer the delay continued, the harder it would become to secure a bank loan.

But when a salesperson replied to him in August, they told Mr Mibus the delay was due to demolition approvals and there was "nothing to worry about financially".

The City of Melbourne issued a first round of approvals in July that year and said subsequent approvals were never progressed.

"I don't feel they have been upfront with buyers as there haven't been regular updates to keep us informed," Mr Mibus told the ABC over email.

"As a result, I felt something was awry.

"There has been much confusion on my part without adequate explanations or communications."

There was more confusion when purchasers were told one company involved in the project had entered voluntary administration in February 2025.

"The administration is isolated to a management entity, which is a separate company," the email to purchasers said.

"It does not affect the delivery of the STH BNK by BEULAH project, nor is it affiliated with contracted sales and other BEULAH projects remain unaffected."

While the STH BNK project was in the BEULAH stable, it was being delivered by several related companies — known as special purpose vehicles (SPVs) — set up for different aspects of the project, which is common in the construction industry.

One entity, tasked with project development, entered voluntary administration for about two months after consultants claiming to be owed hundreds of thousands of dollars began wind-up proceedings in court at the start of 2025.

That entity's director told administrators from Pitcher Partners that trouble securing construction financing because of the project's scale meant the entity couldn't pay debts when they became due.

In preliminary findings last April, the administrators found the entity was "possibly insolvent" from January 2024 and was later issued multiple letters of demand for invoices dating back to at least October 2023.

The director told administrators any accusation of insolvent trading would be defended because there was a reasonable expectation of solvency when the debts were incurred, and refinancing options were being pursued.

A separate company had oversight of customer sales, but resident newsletters seen by the ABC suggest a referral program incentivising further sales was promoted to existing buyers while the development entity was facing these difficulties.

Launched in October 2023 and promoted again in March 2024, the program encouraged purchasers to refer friends, family or colleagues to the project's sales team "to share in the breathtaking views and mini-metropolis that you will soon be calling home".

"When your referral successfully purchases a STH BNK residence at completion of the project, you will be rewarded with 2 per cent of the new purchase price taken off your settlement costs," the email said.

BEULAH did not respond directly to questions asking about the referral program and when its sales campaign ceased.

Responding to a question about its contact with customers, BEULAH said any queries were considered on a case-by-case basis.

"Our team continues to respond directly to purchaser enquiries where clarification is required," BEULAH said.

Purchasers 'bear the brunt of the downsides'

The development entity exited administration after creditors agreed to a proposal, put forward as an alternative to liquidation, relying on the sale of the project site to repay some debts.

It's understood that process was complicated when the project's land-holding entity defaulted on a loan to Malaysian bank Maybank.

Receivers were appointed to sell the project site, with an international expression of interest process closing earlier this week.

BEULAH remains hopeful of rekindling the project.

It's understood a new landowner could proceed — enforcing the contracts — or a change in plans once they take carriage of the site could cause the deposits to be returned with interest.

"The current sales campaign does not preclude the project proceeding, and presents an opportunity for an incoming party to realise the site's development potential," BEULAH said in a statement.

"We are continuing to work constructively with all relevant parties to achieve a refinancing outcome and progress a resolution."

Some buyers told the ABC they believed that BEULAH could benefit from interest on their deposits in the event that their contracts eventually settle.

Vivi Tan, a lecturer and contract law expert at RMIT University, said the case demonstrated a lack of protections off-the-plan purchasers when projects go awry.

"In cases such as this, each individual element — the trust account, the fixed price contracts, the sunset clause, the SPV structure — they're each individually lawful and arguably defensible," she said.

"But when you put them together in a case involving insolvency, the purchasers end up bearing the brunt of the downsides."

While several states have moved to tighten rules governing the use of sunset clauses in recent years, Dr Tan said she wasn't aware of a legislated limit on their length in Victoria.

Walking past the site on a recent winter morning, Ms McGhie looked up at the large "For Sale" sign fixed to the side of the building where her first home was intended to be built.

She lamented a worst-case scenario where property prices continued to rise while the money she needed to break into the market remained tied up with the STH BNK project.

"If you don't think you can deliver on something that you're actively selling, it should be law that you refund any deposits or prepayments back to buyers," she said.

"I can't access my deposit to go buy something else today. I have to wait for another seven years — kind of for nothing."