High-profile developer Doma has pushed back the start date for Newcastle's tallest building to amend part of its development approval as it continues discussions with builders and financiers for the project.
Doma had planned to start work on the 30-storey Store building in Newcastle West early this year but told the Newcastle Herald on Tuesday that it was hoping to launch the build in the third quarter of 2023.
"The project is now considering a staged commencement of the east tower in the third quarter of this year and a possible staggered delivery of the west tower starting six to nine months after the east commences," a Doma spokesperson said.
"We are in discussions with several builders and financiers and will be shovel-ready once all approvals are secured."
The company said it expected to lodge an amended development application for the Store's lower "podium" floors of commercial space with City of Newcastle this week but apartment sales in the complex had been "strong" and the plans for the residential towers remained unchanged.
Construction costs across Australia rose by more than one per cent per quarter for almost two years, including a massive 4.7 per cent spike in the September 2022 quarter, before softening slightly to a 0.9 per cent rise in the first three months of this year.
Sources in the Newcastle development industry told the Herald that cost rises and limits on building companies' capacity to take on new work were putting pressure on some developments.
The Herald has been told building company Hutchinson was involved in early discussions on the Store but is no longer involved.
"Doma has been engaging with the local Newcastle subcontract market to explore the ability to stage the works to suit the capacity of [builders] and encourage greater local participation in the build," the Doma spokesperson said.
"The project, like others in Newcastle, has experienced supply chain and cost pressures, but we are working through those challenges.
"The project design is progressing to ensure we meet the requirements of the NSW Design and Building Practitioners Act and lodge the plans to secure a commencement notice."
Doma said on Tuesday that it was "seeing relief" in supply chain constraints and a "normalising of costs post-COVID".
Other major apartment projects on the market but yet to start construction include Watervue, Dairy Farmers Towers, Merewether Residences and Aurora.
The Herald reported in November that the developers behind the troubled Neufort development in Wickham had refunded buyers' deposits after a four-year construction delay.
The head of research for property analysts CoreLogic, Tim Lawless, said in a Linkedin post on Tuesday that pressure on construction costs was "easing", but they were unlikely to fall.
"If you are waiting for construction costs to come down, you may be disappointed," he said.
"Although rate of growth is falling, it's uncommon (but not unprecedented) for construction costs to actually fall."
WHAT DO YOU THINK? Join the discussion in the comment section below.
Find out how to register or become a subscriber here.
