Victorian Rail Project's Underground Land Acquisition Halts 218-Unit Apartment Development, Developer Sues for Over A$100 Million

According to a report by The Times of India, Australian developer H1Land has filed a lawsuit against Victoria's Suburban Rail Loop Authority (SRLA), seeking at least A$100 million in damages, after a state rail project caused its Southpoint apartment project in Melbourne's Cheltenham suburb to stall for two years.

The Southpoint project, located on Nepean Highway opposite the Westfield Southland shopping centre, was planned to deliver 218 apartments. The project received planning approval as early as 2017, more than a year before the Suburban Rail Loop (SRL) project and its proposed Cheltenham station and tunnels were announced. However, in May 2024, just two days after construction crews had mobilised on site to begin work, the Authority issued a notice announcing the planned acquisition of property approximately four metres below the surface, forcing construction to cease.

Court filings allege that H1Land claims government ministers were incorrectly advised that the tunnel would not affect its property, and accuses the Authority of failing to consult with the developer while preparing the rail plans in 2021. By early 2022, the Authority allegedly still had not informed H1Land that its land might be acquired or that the rail project could affect construction. The Authority did not propose a meeting until February 2022, and agreed in the same month of May to cover reasonable costs for design meetings and negotiations. The two sides continued negotiations for the following two years, during which the developer engaged a builder and secured construction financing approval.

The acquisition notice upended this process. In early September 2024, the two sides had reached a A$2.5 million advance compensation agreement. However, H1Land later discovered that in late August 2024, the Authority had already submitted a recommendation to the minister responsible for the rail project seeking to remove almost identical underground land rights—the very rights that formed the core of the compensation negotiations. In 2025, the rail project formally took control of the disputed underground land. Subsequent negotiations between the two sides over modifying the apartment building's design all failed.

The compensation H1Land is currently seeking covers expenses already incurred, losses from delays, legal costs, and claimed lost profits, with the total expected to exceed A$100 million. The company has filed two separate lawsuits in the Supreme Court: one for damages, and another seeking a ruling on whether the government's decision to cancel its underground land rights was lawful. If the company wins the latter case, some of the underground land rights could revert to it, which may further affect the planned rail tunnel.

The impact extends beyond the developer. Since late 2021, more than 100 families and investors have pre-purchased apartments in the Southpoint project. With construction halted, these buyers are still waiting for their homes and have been unable to reclaim deposits already paid.

The case touches on a broader question: what legal responsibilities governments bear toward surrounding property owners who have already obtained planning permits when they push forward with major infrastructure projects. H1Land argues that the Authority should have known its decisions could cause financial losses to nearby property owners who had obtained building permits. The outcome of this case could affect tens of thousands of property owners whose land is involved in major infrastructure projects. The case involves two separate legal proceedings, and final resolution may take a considerable amount of time.