DOMA Group says its Store redevelopment remains on track despite the company failing to secure finance on an apartment project in Canberra.
The Canberra Times reported on Tuesday that construction delays and rising building costs had affected DOMA's 252-dwelling Foothills development in the capital.
DOMA managing director Jure Domazet told the Canberra project's off-the-plan buyers on Monday that the cost blowout had "made management of this risk impossible for components of this development".
"The delays and cost escalation have meant that finance is unable to be secured for the development as it currently stands," he wrote in a letter to buyers.
Mr Domazet said on Tuesday that the Canberra project was not relevant to its operations in Newcastle, where the company plans to start work soon on the city's tallest building.
"It should be noted that this issue is isolated to the Foothills development and is a result of the long history of delays on site," he said.
"No other DOMA developments are affected."
DOMA said in August that it had sold 70 per cent of apartments in the east tower of the 30-storey Store development and had started selling units in the west tower.
The company said at the time that it planned to start work on at least one of the towers in early 2023.
Asked on Tuesday when construction would start, the DOMA spokesperson said the company was working through an amendment to commercial space on the development's lower floors.
"Once we have approval in place we'll be in a better position to comment on a start date," he said.
DOMA released the first stage of its Foothills project to the market in early 2020.
Mr Domazet told buyers on Monday that construction costs had risen by 25 per cent in the ensuing two-and-a-half years.
He said there was a "strong possibility" no further construction activity would take place on the site in the Canberra suburb of Campbell before the end of 2023, which would push the potential completion date to late 2025.
"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," he wrote.
"DOMA are now reassessing delivery options for The Foothills and will provide a further update to buyers by the end of the first quarter of 2023."
The Store project includes 352 apartments rising above the existing car park and bus interchange on the site.
The Hunter Street complex includes commercial space on the lower levels and a swimming pool, tennis court, barbecue area, garden and children's playground on the resort-like car park roof.
The Hunter and Central Coast Regional Planning Panel approved the residential towers in July.
DOMA is continuing construction work on its Little National Hotel and office development in Honeysuckle Drive, having completed the Huntington apartments on the Honeysuckle waterfront.
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