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Onyx
‘I’m very surprised it came to this,’ one analyst, who asked not to be identified, told REFIRE. ‘The refit of the former office building to convert it into apartments kept taking longer and longer which, in turn, hiked up the cost overrun.'
The developer behind Frankfurt’s luxury living tower, Onyx, has filed for insolvency in Frankfurt this month.
Despite billing the development as being in a 'privileged location with the potential to increase in value’ in the prospectus for Onyx, developer KSW Verwaltungs GmbH und Co. Wohnungsbau KG, which is headed up by Dr. Daniel Korn, had to file for insolvency last week, despite selling around two-thirds of the 33 apartments in the 55-meter high tower. The costs are believed to have spiraled out of control, from an estimated €30m initial budget to almost €90m.
‘I’m very surprised it came to this,’ one analyst, who asked not to be identified, told REFIRE. ‘The refit of the former office building to convert it into apartments kept taking longer and longer which, in turn, hiked up the cost overrun. There’s always a danger with luxury developments that the developer adds in more and more elements to give it the ‘wow’ factor. Combine that with buyers who have their own specifications for their apartment and it can be a recipe for disaster.’
The project is believed to be close to completion, although what this means for buyers who have already financed part of the project remains unclear. ‘The most likely outcome is that they will have to discuss it further with the insolvency administrator, Stephan Lauberau,' the analyst said, ‘I would expect them to have to pay an additional fee in order for the project to be completed. However, it is very hard to gauge how big it could be.’
Others in the industry say that the developer was simply too ambitious, citing the price of the apartments, which start at around €6,000 per sqm but which reportedly rise to as much as €14,000 per sqm. In the end, Onyx, which hoped to offer ‘first class living’ with a 5-star concierge service may, quite simply, have taken too long: the development was supposed to take just two years to be completed but ended up overrunning by three years – and it is still not finished.
Politicians have also criticized luxury high-rise apartments in Germany. Mike Josef, chairman of the SPD in Frankfurt, has said that the increasing number of luxury high-rises is no solution to the housing problem, given that they typically cost around €7,000 per sqm, making them ‘virtually unaffordable’.
KSW Verwaltungs GmbH und Co. Wohnungsbau KG could not be reached for comment.
