Partially developed residential land off Wollaston Road is expected to be sold as a multi-million-dollar package after the company that owns it was placed in the hands of receivers.
Major accounting firm KordaMentha has been appointed receiver for SMKH Pty Ltd, owned by three former prominent Warrnambool businessmen - Darren Harris, David Stapleton and Stuart Mackay.
The land in Riverside Estate was bought for $3.5 million in 2006.
It was then rezoned and revalued at millions more but SMKH can no longer service its Bendigo Bank loan.
Mr Stapleton said the costs of developing property had risen tremendously and a combination of factors had led to SMKH facing overwhelming challenges.
He said the receiver would sell the property to a new developer in one lot - comprising 16 titled lots and 34 acres making up a potential 115 future lots to be developed.
The retired builder said that after initially buying the land in 2006 and having it rezoned, it was revalued.
"It was rezoned to residential and then there was a structure plan for that whole area north of the Merri River at significant cost," he said.
"The time it took to rezone and have the plan done was also significant and construction started in 2013. It was a just a lengthy process to do the structure plan.
"We've struggled to service the loan with the Bendigo Bank, it's just become too hard."
Mr Stapleton said he was naturally disappointed that after 13 years of work SMKH had gone into receivership.
"It's very disappointing, but I truly believe Riverside Estate still has fantastic potential, especially due to the location near the Merri River and the city views," he said.
"There's three acres of parkland on the river. The best is yet to come for Riverside because of access to the river and those unique views. It should be fantastic and I look forward to driving through it."
Mr Stapleton said he was hopeful the estate would reach its full potential.
"We've done all the hard yards. It was really hard going, but the potential for something outstanding remains," he said.
Mr Stapleton said the building of the new special development school nearby was a great boost for the area and would hopefully force the upgrade of Wollaston Road by the Warrnambool City Council due to the large amount of traffic generated in the past few years.
"There's the provision for a footbridge across the Merri River to link up with the greater Warrnambool city bike paths and give far greater access to Brauer College," he said.
Harris Wood Real Estate principal Danny Harris is handling the sale of the SMKH property.
"It's prime residential real estate in Warrnambool. I believe we'll start marketing it in the next week with a national campaign," he said.
"The ownership entity is in receivership and we've been asked to find a new developer to continue the good work of the previous developer, who is no longer able to service their mortgage."
SMKH shareholder Stuart Mackay passed away in April last year while Mr Harris no longer lives in Warrnambool.
Mr Harris said he hadn't had anything to do with the Riverside Estate development for "three or four" years and he had no comment to make.
Mr Stapleton and Mr Harris were in business together for 25 years and developed the Banyan Place apartments, Aqua Ocean Villas in Merri Street and a subdivision in Koroit.
It's expected that the receiver will get a new valuation on the property but whatever that valuation is, it will not cover the SMKH debt.
KordaMentha's executive director of restructuring in Melbourne Andrew Knight was contacted but provided no comment.
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