A controversial development near the Australian War Memorial in Canberra will now sit untouched until at least the end of next year after the developer failed to secure finance for the project.
Approval for Doma Group's The Foothills development at the base of Mount Ainslie was granted almost two years ago after an assessment found an Aboriginal artefact scatter at the site held little heritage value.
But today, Doma managing director Jure Domazet confirmed work on the site had been stalled until at least the end of 2023.
"Whilst development, environmental and heritage approval processes were undertaken, building costs (including the price of raw materials), have risen by nearly 25 per cent," Mr Domazet said.
"Cost escalation in off-the-plan developments is generally allowed for by developers, but the delays, coupled with unusually high escalation that the whole industry has experienced in the last two years, has made management of this risk impossible for components of this development."
Mr Domazet said, as a result, finance for the project was unable to be secured.
"Infrastructure works, funded by Doma, will be completed on the site and then there will be a pause while the situation is assessed," he said.
"These expected delays will also render the current sunset clauses within the existing sale contracts unacceptable to the project financier and will need to be extended."
Mr Domazet said buyers of the first three stages of the development had been contacted about the delays.
But it is not clear whether Doma has tried to cancel buyer contracts.
The ABC understands that real estate agents have been told to await further instructions for their clients, which are likely to be delivered in March next year.
Though construction at the site is not expected to restart until at least the end of next year, with Doma confirming the completion date had been pushed back until the end of 2025.
'It is a drastically different world': ACT Property Council
ACT Property Council acting executive director Ross Grove would not be drawn on whether more developers could find themselves in similar situations but said it was clear the industry was "feeling the pinch".
"The costs anticipated two years ago are nothing like the cost the industry is expecting today," Mr Grove said.
"That is because of an unprecedented time as the global economy reacts to a changing supply chain, post-COVID landscape and tensions in eastern Europe."
He said, as a result, it was reasonable for the industry to review and reassess costs going forward.
"Material costs are going up," he said.
"It is a drastically different world to what the industry thought they would be in in 2022 when they were in 2019."
ACT Attorney-General Shane Rattenbury also said that the government could not comment on the circumstances of individual developments.
But he said that legislation was introduced last year to make sure that in any circumstances where contracts were cancelled, they were not rescinded unfairly.
"Inability to obtain finance, if it is a factor beyond the seller's reasonable control, is one of many factors the Supreme Court must consider in determining the rescission would be just and equitable," Mr Rattenbury said.
"Other factors include the effects on the buyer, whether the seller has acted unreasonably or in bad faith, and any reasonable steps taken to avoid a rescission.
"I would encourage any buyer who is unsure about their rights to talk to their legal representative."
Development given green light despite concerns about land's Indigenous history
The Foothills development, featuring a private tennis court, pool and more than 200 residences, was granted initial approvals to begin construction in December 2020.
Earlier that year, local Ngambri man Shane Mortimer had raised concerns of the land's special Indigenous history.
And it was later revealed a 2013 desktop assessment of the land never consulted local Indigenous groups and did not include a field survey of the site.
That led to the then-environment minister Sussan Ley asking her department to review the case.
But while a heritage assessment commissioned by Doma Group confirmed the presence of an Aboriginal artefact scatter at the site, assessors deemed there was not enough remaining of the site's Indigenous history to warrant protection.
