Sapphire: Shattered dreams or a bullet dodged?

The whole concept of buying off the plan took another hit this week with a TV news magazine’s coverage of a heartbreaking stand-off around a near-complete building in Gosford.  

As A Current Affair reported, work has stopped on the Sapphire Apartments building in the NSW Central Coast town, for a variety of reasons, not least that the developer has gone into receivership.

The reasons for that initial failure may be many and complex. Since the project was first mooted, there has been Covid, which directly and indirectly led to supply chain issues, major increases in material costs and skilled worker shortages.

Meanwhile the people who put down deposits have watched the notional, advertised prices of flats in the block, and others nearby, rise steeply.

To them, this means that not only are they missing out on this property boom – having signed up to pay relatively low prices for theoretically more valuable flats – but it will be impossible to get a unit of similar value with the cash they get back when their deposit is returned.

The problem is that, as Flat Chat discovered this week, not only has the developer gone but the Building Commission has discovered a stack of defects in the block.  And one of the problems with defects is that rectification and repairs can reveal other previously hidden problems.

Adding to the mess are the facts that there is no owners corporation – the collective body of apartment owners who might otherwise push for a resolution that helped potential purchasers – because there are no apartment owners.

The liquidators, it seems, can’t complete the building because they don’t have the financial backing, especially the sums required to undertake an open-ended project where the costs could easily multiply (or not) as the rectification progressed.

A spokesperson for Building Commission NSW told Flat Chat on Friday morning that they are working with the Receiver for the Gosford Sapphire Development and these discussions will determine what steps need to be taken for the building to achieve an Occupational Certificate. 

“The Building Commission understands the Receiver is currently organising for consultants to undertake a thorough assessment of the project which will help inform what further remediation is required,” the spokesperson added. 

The ACA TV report is headlined on the idea that purchasers are worried that their contracts could be “torn up” and their deposits returned.

For many strata observers, that seems like the least-worst outcome; to get back deposits the buying power of which has seriously diminished, as opposed to being given the keys to apartments that come with the promise of years of disputes and legal battles to fix problems owned but not caused by entities that can’t or won’t pay.

With that in mind, these shattered dreams may in fact be bullets dodged. So you can fully understand Friend of Flat Chat and eminent strata lawyer and consumer advocate Amanda Farmer of YourStrataProperty.com scoffing at the idea of buying off the plan.

Meanwhile, home hunters can only hope that this is one of the last pre-iCIRT blocks to come to near completion, as the David Chandler-inspired star rating system pushes reliable developers to the fore, provides 10-year building insurance cover and bounces the bad actors out of business.

But the question remains, who is going to step up and take the risk that all the initial purchasers embraced, and turn the Sapphire from a flawed bauble into the gem it was intended to be?