Lowy family-backed consortium pulls out of Double Bay project

The Lowy family-backed Assembly Funds Management, together with private developer Pallas Group, have pulled out of the proposed Cross Street car park project in Sydney’s upmarket Double Bay, after negotiations with Woollahra Council hit a roadblock.

The long-running proposal to convert a 380-space car park into a new cinema complex, with retail and community space, offices and residential apartments to invigorate the precinct will now go back to the drawing board.

The Cross Street car park in Double Bay, Sydney

Assembly Funds, the investment house backed by the billionaire Lowy family, and Pallas teamed up as a consortium for the project and were appointed by the council as the preferred development partner in April 2022, following a competitive selection process.

Over the past two years, the consortium has worked with the council to refine the scheme and progress commercial negotiations of the development agreement. It is understood that they were unable to reach agreement on key commercial terms for the project. The consortium parties declined to comment on their decision to walk away.

It has been a fraught project that started in 2016 when developer Axiom Properties, boutique construction company Built, and Palace Cinemas were appointed by Woollahra Council to work on the redevelopment, following a two-year expression of interest process.

However, in March 2020 Built withdrew from the process. The council launched a new tender process later that year, with the Assembly/Pallas consortium appointed some two years later.

At the time of the appointment, Craig Swift-McNair, general manager of Woollahra Council, said the proposal “will enhance the Double Bay centre’s social, cultural and commercial life and affirms the council’s ongoing commitment to revitalising the area”.

“This is a great result for the community, and will complement the significant improvements to Double Bay delivered recently by council, including an award-winning library, the highly successful Kiaora Place redevelopment and ongoing revitalisation of the commercial precinct, which has been a major focus for council,” Swift-McNair said.

Assembly Funds Management was established in 2019 as a partnership between former Westfield executive Michael Gutman, the Lowy Family Group (LFG) and Alceon. It invests in a range of real estate sectors through unlisted diversified funds.

Aside from the car park project, the Double Bay precinct is undergoing major upgrades, with new apartment and mixed-use developments under construction, or in the planning stage.

Recently, the popular Double Bay Intercontinental Hotel was sold for $215 million to a consortium of buyers led by developer Mervyn Basserabie and property figures Allen Linz and Eduard Litver.

Aside from the Double Bay projects, Pallas and its development arm, private group Fortis, has achieved planning approvals for $570 million worth of projects across three major developments in Sydney and Melbourne.

These include the second tower of the $320 million Wiltshire House in Richmond, inner Melbourne; an $80 million commercial building in Manly and a landmark $170 million precinct in Double Bay with Restoration Hardware (RH).

In Melbourne, the Wiltshire House project is 2200 square metres over two towers, designed by architect SJB. Under new plans, the second tower will move from commercial to residential in response to the pent-up demand for residential stock in Melbourne’s inner suburbs.

The new scheme for the second tower will now have 10,000 square metres of premium residential, commercial and retail space, featuring ground-floor retail and hospitality, alongside 50 apartments spanning 11 floors above.

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