Building company collapses – Michmutters

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Geelong building company Norris Construction Group collapses owing $27m

Geelong building company Norris Construction Group collapses owing $27m

A collapsed Victorian construction company has $27 million in debt and owes $3.2 million to around 140 staff that it is unlikely to be able to repay, according to the liquidator’s report which revealed what went wrong.

The Geelong-based company called Norris Construction Group, which included seven associated companies, went under in March with KordaMentha appointed to handle the liquidation.

Its report, which was filed with the Australian Securities and Investments Commission, revealed the range of reasons for the company’s failure.

It included the “misprising of projects” and a “crisis of confidence” experienced by the business during lockdowns in Victoria between March and October 2020 resulting in projects being tendered at “very low prices”.

This resulted in “heavy losses” on a very large number of projects, the report to creditor’s said.

It also outlined “cultural issues amongst the executive team leading to staff losses and staff turnover” as well as hiring new staff on “high remuneration packages”.

The pandemic also contributed to the company’s demise, as well as “noncompliance” with lodging statements and returns with the ATO and unpaid taxes, alongside “insufficient working capital” to meet its short term obligations.

The company had completed work on the Manufutures hub at Deakin University and the Marngoneet and Chisholm Road prisons and worked across Melbourne and southwest Victoria.

Millions owed to employees

From the overall group, 235 former employees are owed $4 million in wages and entitlements but will have to rely on the federal government’s Fair Entitlements Guarantee (FEG) to get their money back.

However the scheme, which is available for employees of companies that become insolvent, caps back pay and does not pay superannuation.

Aside from the $3.2 million owed to employees of Norris Construction Group, there was between $187,000 and $277,000 owed to 235 staff from the overall group including wages, redundancy payouts and superannuation.

But KordaMentha partner Andrew Knight said four out of the five companies that employed staff had “insufficient” assets to pay back the money owed.

“We understand that for four of the five employing entities, FEG has processed and paid over 90 per cent of the employee claims,” he said.

“FEG is still working on claims in the fifth entity, Norris Construction Group, which are more complex due to the quantity of claims as well as the relevant Award which applies to these employees. We estimate the majority of these claims will be resolved and paid within the next month.

“Unfortunately, there are some entitlements that are not covered by FEG, for example superannuation and amounts in excess of caps, and payment of those are dependent on the outcome of the liquidations.”

While an auction of the company equipment and assets in May raised more than $17 million, and is expected to paid to Westpac, the bank will still suffer a “shortfall”, said Mr Knight as its owed $22 million.

The ATO also has an outstanding debt of $5 million, the report revealed.

However, the ATO debt was unlikely to be repaid, Mr Knight added.

“The amount due to the ATO is unsecured, and given the likely shortfall to the employees and the secured creditor, it’s unlikely unsecured creditors including the ATO will be paid a dividend,” he said.

The creditor’s report also flagged it was investigating any potential offenses of director’s duties including trading while insolvent.

construction crisis

Overall, the construction industry has been plagued with a spate of collapses caused by a perfect storm of supply chain disruptions, skilled labor shortages, skyrocketing costs of materials and logistics, and extreme weather events.

Earlier this year, two major Australian construction companies, Gold Coast-based Condev and industry giant Probuild, went into liquidation.

Victorian construction companies have been particularly sensitive to the crisis.

Two building companies from Victoria were casualties of the crisis having gone into liquidation at the end of June, with one homeowner having forked out $300,000 for a now half-built house.

Then there have been smaller operators like Hotondo Homes Horsham, which was also based in Victoria and a franchisee of a national construction firm – which collapsed earlier this month affecting 11 homeowners with $1.2 million in outstanding debt.

It is the second Hotondo Homes franchisee to go under this year, with its Hobart branch collapsing in January owing $1.3 million to creditors, according to a report from liquidator Revive Financial.

Snowdon Developments was ordered into liquidation by the Supreme Court with 52 staff members, 550 homes and more than 250 creditors owed just under $18 million, although it was partially bought out less than 24 hours after going bust.

Others joined the list too including Inside Out Construction, Solido Builders, Waterford Homes, Affordable Modular Homes and Statement Builders.

The most recent collapse was NSW building company Willoughby Homes, which went into voluntary administration last week, leaving at least 30 homes in limbo.

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Online brokerage company Robinhood lays off almost a quarter of its staff

Online brokerage company Robinhood lays off almost a quarter of its staff

A US online trading platform, which experienced a boom in customers during the pandemic, has slashed its staff by 23 per cent after being hit by the cryptocurrency market crash and record inflation.

It’s the second round of staff sackings for the company called Robinhood, which laid off 9 per cent of its 3,900 employees in April.

Yesterday’s announcement saw the company shed 23 per cent of remaining positions — about 815 jobs — meaning the company will have sacked more than 1000 employees in a matter of months between the two rounds of redundancies. Roles in operations, marketing and program management the most impacted by yesterday’s decision.

Robinhood was embroiled in the Gamestop controversy early last year when Reddit renegades and amateur investors blew up the share price of the brick-and-mortar video game retailers, but this momentum has failed to continue.

Robinhood’s chief executive Vlad Tenev said that letting go of 9 per cent the workforce in April to focus on “greater cost discipline” for the organization “did not go far enough” in a blog post on the company’s website.

“Since that time, we have seen additional deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash. This has further reduced customer trading activity and assets under custody,” Mr Tenev said.

“Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the Covid era would persist into 2022.

“In this new environment, we are operating with more staffing than appropriate. As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me.”

Last year, Robinhood grew from 700 roles at the end of 2019 to nearly 3,900 by the first half of 2021, but its 2,022 cuts take its total workforce down to 2,600.

Mr Tenev said staff would receive an email and Slack message with their employment status after the company wide meeting announced the redundancies on Tuesday.

He added the cuts were a “painful decision” and meant the company would be “parting ways with many incredibly talented people”, although staff would be given the opportunity to remain with the company until October 1.

Robinhood also revealed its second quarter results which showed its monthly active years plunged to 14 million down by 34 per cent from a year earlier.

Revenue also plummeted by a whopping 44 per cent to $US318 million ($A461 million).

Robinhood became a trading phenomenon during the pandemic as it offered an easy to use, mobile first platform and in the second quarter of last year it boasted more than 21 million active users who were keen to trade crypto and meme stocks.

But with lockdowns in the past, revenue tied to customer’s trading dropped 55 per cent in the latest quarter to $US202 million ($A292 million).

The company has also been slugged with a $US30 million ($A43 million) fine from the New York State Department of Financial Service for alleged violations of anti-money laundering and cybersecurity regulation in its cryptocurrency trading unit.

A global tech bloodbath has seen a spate of companies laying off staff.

In Australia a crypto company called Immutable, which valued at $3.5 billion, is facing a fierce backlash after sacking 17 per cent of its staff from its gaming division, while continuing to “hire aggressively” after raising $280 million in funding in March.

Meanwhile, Australia healthcare start-up Eucalyptus, which provides treatments for obesity, acne and erectile dysfunction fired up to 20 per cent of staff after an investment firm pulled its funding at the last minute.

Debt collection start-up Indebted sacked 40 of its employees just before the end of the financial year, despite its valuation soaring to more than $200 million, with most of the redundancies made across sales and marketing.

Then there was Australian buy now, pay later provider Brighte, that offers money for home improvements and solar power, which let go of 15 per cent of its staff in June, with roles primarily based on corporate and new product development.

Another buy now, pay later provider with offices in Sydney called BizPay made 30 per cent of its redundant workforce blaming market conditions for the huge cut to staffing in May.

Earlier this year, a start-up focused on the solar sector called 5B Solar, which boasts backing from former prime minister Malcolm Turnbull, also sacked 25 per cent of its staff after completing a capital raise that would inject $30 million into the business

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Australian crypto platform Immutable sacks 17% of staff despite plans to ‘hire aggressively’

Australian crypto platform Immutable sacks 17% of staff despite plans to 'hire aggressively'

An Australian crypto company valued at $3.5 billion is facing a fierce backlash after sacking 17 per cent of its staff from its gaming division, while continuing to “hire aggressively” after raising $280 million in funding in March.

The crypto platform, which is an Australian unicorn called Immutable, could be hit with legal action as the union questioned the validity of the redundancies.

The union called Games Workers Australia has disputed the number of staff members that were fired claiming it was at least 30 roles, while Immutable has insisted just 18 workers were let go.

The staff came from the company’s flagship video game Gods Unchained and were advised of the redundancies 24 to 48 hours before being told to leave.

Staff were fired from roles including video effects artists, senior engineers and a marketing director and the process involved a 30-minute company wide meeting last Monday.

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‘devastating news’

Game Workers Australia, a branch of Professionals Australia, said it is supporting staff from Immutable Games Studio who received the “devastating” news that they would be made redundant.

“Based on information we have received, Game Workers Australia believes there are at least 30, but potentially more, job losses at Immutable,” said Professionals Australia CEO Jill McCabe.

“Immutable has provided varying reasons to their employees as to why the redundancies were necessary.

“While some employees were advised that the reason for their redundancy was due to individual performance metrics, others were advised the cause was due to an organizational restructuring or the non-alignment of their role to business goals.

“While staff were advised that they were able to request information about other roles in the company, their were given the impression that they would not be suitable for these roles.”

However, an Immutable spokesperson said the restructure was a “difficult choice” and was performed to meet business goals, while individual performance was not a reason for any redundancies.

They added individual staff were given the opportunity to respond to the redundancies and most were found unsuitable for redeployment to vacant roles.

Hiring 80 more roles

Concerns have been aired that Immutable is still hiring for similar roles that were made redundant such as product managers and engineers.

An Immutable spokesperson said the restructure impacted 6 per cent of the total number of employees at the company and it continued to “hire aggressively”.

“As we grow, the nature of the expertise the company needs is changing. We needed fewer artists, unity engineers and card designers and are hiring more tokenomics experts, blockchain engineers and crypto product managers,” they said.

“We have established new roles for Gods Unchained which we will be hiring for over the next six months; in total we will be hiring more new roles into Gods Unchained than were made redundant.

“Immutable is growing from 280 employees today to over 360 by the end of the year.”

The company started the year with just 120 employees and has already more than doubled, they added.

Game Workers Australia also claimed that Immutable provided no opportunity for employees to respond to the company’s intention to make them redundant and most of the redundancies were advised and executed within 24 to 48 hours.

“Sadly, the experience of game workers at Immutable is emblematic of the broader problems across Australia’s growing $3 billion games sector,” Ms McCabe said.

“While game workers are highly qualified and skilled, wages are unsustainably low, the hours are long, and unpaid overtime is common.

“Many people burn out of our industry and leave before even making it to five years.”

But the Immutable spokesperson defended its process and said the company “followed a fair and consistent process in relation to the restructure that is in line with legal obligations”.

Earlier this year, Immutable’s founders James, 30, and Robbie Ferguson, 25 were one of 13 new entrants that placed on the Australian Financial Review rich list with an estimated combined wealth of $1.01 billion.

Tech sector bloodbath

Immutable’s staff are the latest casualties in the tech sector, which has seen a spate of companies firing staff as conditions get tougher.

Australian healthcare start-up Eucalptys that provides treatments for obesity, acne and erectile dysfunction fired up to 20 per cent of staff after an investment firm pulled its funding at the last minute.

Debt collection start-up Indebted sacked 40 of its employees just before the end of the financial year, despite its valuation soaring to more than $200 million, with most of the redundancies made across sales and marketing.

Then there was Australian buy now, pay later provider Brighte, that offers money for home improvements and solar power, which let go of 15 per cent of its staff in June, with roles primarily based on corporate and new product development.

Another buy now, pay later provider with offices in Sydney called BizPay made 30 per cent of its redundant workforce blaming market conditions for the huge cut to staffing in May.

Earlier this year, a start-up focused on the solar sector called 5B Solar, which boasts backing from former prime minister Malcolm Turnbull, also sacked 25 per cent of its staff after completing a capital raise that would inject $30 million into the business

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Australian tech company Metigy collapses impacting 75 staff

Australian tech company Metigy collapses impacting 75 staff

Staff who worked for an Australian tech company have been left “shell-shocked” by its sudden collapse after it planned to raise money with a valuation of $1 billion.

The company called Metigy was founded in 2015 and offered an artificial intelligence platform that provided insights into customers for small business marketing.

But its demise has impacted around 75 staff, who appeared to have been blindsided when informed on Monday that the company had gone into administration.

Some staff members had joined the company, which was founded by David Fairfull and Johnson Lin, just a few months ago.

One employee, who had been with Metigy for almost 18 months, said two weeks ago she “never thought” that the company would have gone under.

“All of us employees were informed today and we are shell-shocked to say the least,” she wrote on LinkedIn.

“It’s heartbreaking to have our journey cut short so early, when I could see that we were turning a corner with the product in the last few months and what was coming up in the next few months.”

Another staff member revealed plans they were making “for all the great work we could do with a new brand and communications function at Metigy” that she hoped to lead, but instead found herself suddenly unemployed.

“We’re pretty shell-shocked. It’s not because we didn’t care enough or because we did a bad job or the market conditions weren’t in our favor – and that will always be the toughest thing to deal with when you work as hard as we did,” she wrote .

“I am beyond grateful to have met this group of people who I now call friends and I’m so sad that we don’t get to continue on this rollercoaster together.

“My heart is always in start-up land regardless of how hard it gets. It’s an experience that teaches us so much about ourselves and I will always choose it.”

The company’s collapse is a particular shock as it planned to raise money just two months ago.

A recent presentation from a Metigy investor showed the company’s revenue had grown more than 300 per cent in both the 2020 and 2021 financial years, and had more than 25,000 clients across 92 countries, the Australian Financial Review reported.

Meanwhile, Australian private equity firm Five V Capital had recently presented Metigy as a case study showing it was valued at $105 million in October 2020 when it invested and its last evaluation sat at $1 billion in April this year.

Metigy’s collapse came as a “big shock” and had caused “a great deal of sadness”, one employee added on LinkedIn.

He said that the “growth team never failed to deliver” with a list of achievements in their short time, including acquiring roughly 38,000 users from a base of just a few thousand, rebuilding the website leading to significant improvements in conversion rates and a full rebrand .

Simon Cathro and Andrew Blundell of Sydney-based firm Cathro Partners were appointed as administrators on Friday night.

The duo said they are working with investigators and creditors to assess the business commercials and explore the possibility of its sale.

“We are exploring the urgent sale of Metigy’s assets and intellectual property as part of the voluntary administration process and consider a sale could be an outcome in this process,” they said.

Metigy has more than 30 shareholders, according to documents lodged with the Australian Securities and Investments Commission.

Tech companies are struggling in Australia after a share market bloodbath, which has left investors spooked and made funding harder to find.

Other failed businesses include grocery delivery service Send, which went into liquidation at the end of May, after the company spent $11 million in eight months to stay afloat.

Last month, Australia’s first ever neobank founded in 2017, Volt Bank, went under with 140 staff losing their jobs, while 6,000 customers were told to urgently withdraw their funds.

A Victorian food delivery company that styled itself as a rival to UberEats and Deliveroo also collapsed in July as it became unprofitable, despite making more than $6 million worth of deliveries since it launched in 2017 and had 18,000 customers.

A venture capital firm issued a sobering message about the state of Australia’s start-up industry, warning that more new companies would go bust and pulling back on funding as a result.

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Developer Cedar Woods shelves Brisbane townhouse project leaving homeowners ‘screwed’

Developer Cedar Woods shelves Brisbane townhouse project leaving homeowners 'screwed'

A homeowner who bought into an off-the-plan development in Brisbane, which has now been shelved, has described the development company’s decision as an “absolute joke” claiming that it would leave his family financially “screwed”.

Chris* signed up to buy an $800,000 townhouse last year in the $180 million development called Greville, in the northern suburb of Wooloowin, and was scheduled to move into the new home with his partner and daughter in 2023.

The project was set to deliver around 250 homes, a recreation zone and pool, as well as a community park, and had originally been marketed as an urban village just 5km north of Brisbane’s CBD.

Now, the family has been left angry and upset after Perth-based developer Cedar Woods announced it was delaying the project, blaming rising costs, labor shortages, significant rainfall events in Queensland and extended construction timelines.

Buyers have been given the option to have their deposits refunded and will be offered the first choice when the project is remarketed, according to the developer, which it said hoped would be in the second half of next year.

But Chris claims they are “stuck in no man’s land” because the developer doesn’t have a clause in which they can cancel the contract, a claim Cedar Woods would not comment on.

In a letter to buyers, Cedar Woods proposed that both the developers and buyers agree to “a mutual termination of the contract” as the project would be “indefinitely delayed”.

But so far the family says it has refused to accept the return of their deposit, nor had any responses to other inquiries.

“There’s never been any consultation whatsoever. There was a post on Facebook in April about how they would start (construction), but then the post was deleted and we got phone calls saying everything was cancelled,” Chris told news.com.au.

“Financially, we have been really screwed by Cedar Woods’ decision because now the property prices are still up and we personally don’t think they are going to fail as much as speculators say. Add this to the pressures due to the cost of living going up and interest rates going up, greatly limit our choices.

“We have been looking at similar places and we are not going to get anything for under $1 million for the area.

“We tried to put an offer on a development of four townhouses and the real estate agent basically laughed at us as they are after the mid-$1 million mark for a place with the same square meterage and floor plan similar to what we had bought. ”

Cedar Woods did not respond to a news.com.au’s question on whether the townhouses and apartments would be sold at a higher price once the project was relaunched.

A post on its official Greville Facebook page back in April that said works were under way has now been deleted, but homeowners were left blindsided when the project was shelved just a month later.

“Construction is off to a great start in 2022,” the now deleted post read.

“Despite the weather in southeast Queensland, we are happy to share that civil works on the site are partially complete and construction will begin shortly. It is an exciting time for Greville and we are excited to show you what is to come.”

Chris, who works as a project manager, added that communication had been poor and the couple were “most peeved” that there was “no real consultation” by the company about the decision to shelve the project.

“This decision has majorly impacted people’s lives and they just don’t seem to care,” he said.

Cedar Woods managing director Nathan Blackburne said the firm’s decision was extremely difficult, but it was the right decision in an environment where builders were facing additional risks.

“We know purchasers are disappointed and (we) have apologized to them. We greatly appreciate the understanding of our purchasers who in the main are aware of the current conditions,” he said.

Extended construction time frames and increased costs had meant that the particular stages could not proceed as completion wasn’t possible by specified completion time frames, I added.

“Cedar Woods has continued to engage with the affected purchasers and provide opportunities for further discussion while prioritizing the return of their deposit,” he said.

“The company hopes to re-engage with them when conditions in the sector are expected to improve over financial year 2023.”

But for Chris and his partner, who are in their mid-30s, their “huge” excitement about owning the townhouse has turned into a nightmare.

“We are tossing up if we have to move further out of town away from family, friends, work and childcare, which would make life more inconvenient, but that’s one of the only options we have,” he said.

“Cedar Woods made a decision to protect shareholders and their bottom line as they are a business and I get that, but the impact that it will have on our family and other families out there is not insignificant.”

Meanwhile, work is still continuing on the project site, which has left buyers furious with many lashing out at the developer on Facebook.

“Cedar Woods is continuing to finalize all of the civil construction, remediation work of the historical laundry and the delivery of the community park in preparation for the project to come back to market,” Mr Blackburne said of the continued works.

Australia’s construction crisis

It’s not the first project to be suffered this month in Australia’s embattled construction industry.

Perth developer Sirona Urban killed off a $165 million luxury tower, where more than 50 per cent of apartments had been bought off the plan, blaming skyrocketing construction costs and shortages.

Owner Matthew McNeilly said construction costs had risen by 30 per cent in the past 10 months.

Then there was a Melbourne developer that abandoned plans to build a $500 million apartment tower on the Gold Coast, blaming the crisis in the building industry and surging construction costs for making the project unprofitable.

The development by Central Equity was set to kick off this year featuring 486 apartments in a 56-storey tower, known as Pacific One, and was due to be built on a beachfront block in Surfers Paradise.

Apartments had been sold with a starting price from $650,000 each.

Overall, the construction industry has been plagued with a spate of collapses caused by a perfect storm of supply chain disruptions, skilled labor shortages, skyrocketing costs of materials and logistics, and extreme weather events.

Earlier this year, two major Australian construction companies, Gold Coast-based Condev and industry giant Probuild, went into liquidation.

Then there have been smaller operators like Hotondo Homes Horsham – a franchisee of a national construction firm – which collapsed earlier this month affecting 11 homeowners with $1.2 million in outstanding debt.

It is the second Hotondo Homes franchisee to go under this year, with its Hobart branch collapsing in January owing $1.3 million to creditors, according to a report from liquidator Revive Financial.

Snowdon Developments was ordered into liquidation by the Supreme Court with 52 staff members, 550 homes and more than 250 creditors owed just under $18 million, although it was partially bought out less than 24 hours after going bust.

Others joined the list too including Inside Out Construction, Solido Builders, Waterford Homes, Affordable Modular Homes and Statement Builders.

*Name withheld for privacy reasons

Read related topics:BrisbaneCost Of Living

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RLB forecasts emerging construction cost inflation will ease in 2023

RLB forecasts emerging construction cost inflation will ease in 2023

The rate at which construction costs are soaring – contributing to a spate of high-profile building company collapses – will ease next year, according to new forecasts from global consultancy firm RLB.

Construction cost inflation in Melbourne is forecast to halve, dropping from 8 per cent this year to 4 per cent in 2023, and in Sydney it is predicted to slow from 6.9 per cent to 3.9 per cent.

An even bigger decline is forecast for the Gold Coast with cost growth dropping from 11.5 per cent to 5.5 per cent. Similarly, in Brisbane it should drop from 10.5 per cent this year to 5.1 per cent in 2023, according to forecasts published this week in RLB’s second quarter 2022 International Report.

RLB research and development director Domenic Schiafone said the expectation that costing will ease through next year was due to curtailing demand, likely to be caused by inflationary pressures.

“This easing of demand should allow manufacturing and logistics to get back to ‘normality’ or pre-Covid levels,” he said.

“The easing of demand should also see a softening of material prices with the high level of ‘demand-led price premiums’ reducing.”

Association of Professional Builders co-founder Russ Stephens, whose clients are residential home builders, agreed to escalate costs could halve next year, but off a much higher base.

He said the cost to build a residential home had increased a lot more than non-residential or commercial builds due to the larger percentage of timber used, and that temporary price hikes created by supply and demand were not reflected in the reports we were seeing.

Australia’s typical house build cost has soared more than $94,000 in 15 months, according to figures revealed in analysis by the Housing Industry Association and News Corp Australia earlier this month.

The national inflation rate hit 6.1 per cent in the year to June with new dwellings and automotive fuel the most significant contributors, new figures released by the Australian Bureau of Statistics this week showed. New dwellings were up 20.3 per cent.

Warning to Australians wanting to build

While construction cost inflation is expected to ease sometime next year, in the meantime the pain will continue.

Mr Stephens said because costs were increasing so quickly, consumers needed to be aware prices quoted for builds would not last long.

“If they’ve had a price quoted that is older than 30 days they should expect to have that price renegotiated,” he said.

He also said consumers would see more builders including rise and fall clauses, also known as cost escalation clauses, in contracts.

“It gives the ability for a builder to pass an increase in cost of materials on to the consumer,” Mr Stephens explained, adding it was common in other countries but Australia didn’t typically use them.

“What I would say to consumers is that’s not necessarily a negative thing because if the builders don’t put those clauses in they’ll have to put more contingency in to the price to protect themselves against potential increases.

“So rise and fall clauses are probably a good thing for consumers because it means they will only pay the cost of the increase rather than an inflated prediction of what increases might be, especially as we’re seeing evidence now that the increases will start to slow down next year.”

Factors contributing to the construction industry crisis

The construction industry is facing challenges so great that high-profile building companies are dropping like flies.

Mr Schiafone said fragmented supply chain issues were not resolved and labor shortages across the nation have continued as a result of the pandemic.

The consultancy’s report noted lead times for some products from overseas were currently

16 to 20 weeks, when traditionally they were half that at eight to 10 weeks.

Additionally, the need for construction labor and materials after recent flood damage will enhance existing shortages across the country, he said.

Mr Schiafone said higher fuel prices, increasing power costs and timber shortages were all symptoms of the war in Ukraine and were likely to linger for some time yet.

RLB global chairman Andrew Reynolds said significant cost escalation, global delivery uncertainty, aberrant weather events causing significant construction delays, and labor shortages were common challenges in the industry across the world.

Failed building companies

The latest company to collapse was prominent Melbourne apartment developer Caydon earlier this week, blaming “one difficult market situation after another”.

The next day, on Wednesday, ASX-listed developer Cedar Woods shelved a major inner-city Brisbane townhouse and apartment project due to rising costs and delays.

It came less than a week after Perth developer Sirona Urban killed off a $165 million luxury tower, where more than 50 per cent of apartments had been bought off the plan, blaming skyrocketing construction costs and labor shortages.

It was the second major apartment project to fall over in Australia last week.

A Melbourne developer, Central Equity, abandoned plans to build a $500 million apartment tower on the Gold Coast, blaming the crisis in the building industry and surging construction costs for making the project unprofitable.

Earlier this year, two major Australian construction companies, Gold Coast-based Condev and industry giant Probuild, went into liquidation.

The grim list has continued to grow from there as a number of other high-profile companies also collapsed, including Inside Out Construction, Dyldam Developments, Home Innovation Builders, ABG Group, New Sensation Homes, Next, Pindan, ABD Group and Pivotal Homes.

Others joined the list too including Solido Builders, Waterford Homes, Affordable Modular Homes and Statement Builders.

Then two Victorian building companies were further casualties of the crisis, having gone into liquidation at the end of June, with one homeowner having forked out $300,000 for a now half-built house.

Hotondo Homes Horsham, which was a franchisee of a national construction firm, collapsed a fortnight ago affecting 11 homeowners with $1.2 million in outstanding debt.

It is the second Hotondo Homes franchisee to go under this year, with its Hobart branch collapsing in January owing $1.3 million to creditors, according to a report from liquidator Revive Financial.

Meanwhile, a Sydney family face never being able to build their dream home after their builder Jada Group collapsed in March owing $2.4 million and the cost of their home’s construction jumped to $1.9 million, a whopping $800,000 more than the original quote.

Snowdon Developments was ordered into liquidation by the Supreme Court with 52 staff members, 550 homes and more than 250 creditors owed just under $18 million, although it was partially bought out less than 24 hours after going bust.

Dozens of homeowners and hundreds of tradies were left reeling after a Victorian building firm called Langford Jones Homes went into liquidation on July 4 owing $14.2 million to 300 creditors.

News.com.au also raised questions about NSW builder Willoughby Homes, which is under investigation by the Government after builds stalled and debts blew out to 90 days.

There are between 10,000 to 12,000 residential building companies in Australia undertaking new homes or large renovation projects, a figure estimated by the Association of Professional Builders.

– with Sarah Sharples

Read related topics:Cost Of Living

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Sydney couple build $1.2m property portfolio in just three months

Sydney couple build $1.2m property portfolio in just three months

A Sydney couple, who had been priced out of upgrading their family home, have managed to create a property portfolio worth $1.2 million in the space of just three months.

Amit Kumar and his wife Astha had bought a townhouse in the Sydney suburb of Quakers Hill for $610,000 six years ago.

Despite saving hard and their family home growing in value to $780,000, the couple who have two children aged three and five, discovered Sydney’s skyrocketing property market would mean it was impossible for them to find a new property in the city.
They had discussed the idea of ​​buying other homes but were nervous.

“It was the fear of the unknown,” Mr Kumar said. “You just don’t know what to do, you don’t want to overpay, you don’t want to buy the wrong place and then have it vacant for long periods and with no tenants,” he told news.com.au .

“You don’t know where the growth is going to be and you don’t know what the projects are in certain areas and things like that.”

But the couple met with a buyer’s agent and took the plunge in April, snapping up two properties in that month alone.

The first was in Adelaide in the southern suburb of Christie Downs, a three-bedroom, two-bathroom house.

They purchased it for $425,000 and it has already grown in value by approximately $60,000.

The second property was purchased in Toowoomba, Queensland – a three-bedroom house for $455,000, which has also jumped in value by $50,000.

“We were very nervous, particularly because they actually settled very close to each other… the settlement was two days apart,” he said.

“And also complicating things further was the Easter break and the Anzac Day long weekend happened as well, so it was all on short notice.

“I think at the time there was an election coming up, we didn’t know what the policies were going to be, we didn’t know what the interest rate was doing and how it’s going to affect us.”

But the gamble has paid off so far with Mr Kumar revealing they had 20 rental applications for the Adelaide house before the open home was even held.

“So we had a very large number of applications to actually choose from and we actually managed to get more than what we actually hoped to achieve in terms of rent,” he said.

“So when we bought the place, we were told $410 is a realistic expectation in terms of rent, but we actually ended up achieving $420.”

The Toowoomba home was already tenanted but Mr Kumar said it was at a significantly lower amount to the market rate.

They were told they would get $450 for the place, but after the previous tenant moved out, it was only empty for three days and then rented out for $470, he said.

Their latest buy has been in Bundaberg, a house for $387,000 snapped up in July, which is expected to rent out for $460.

All three properties were also bought sight unseen, Mr Kumar added, while the rents cover their mortgages.

The couple paid $65,000 to $70,000 for each place including stamp duty, using a 12 per cent “sweet spot” deposit recommended by their mortgage broker.

Mr Kumar, who works in sales, said the couple still plan to use their portfolio as a “stepping stone” to buy a bigger place in Sydney in the next 12 to 24 months, but they won’t stop there.

The 39-year-old never believed it would be possible to build a property portfolio but now the couple have a goal to buy eight to 10 properties in the next five to seven years.

He advised others to get into the property market as soon as they can, adding people shouldn’t be influenced by the market, but instead focus on the long-term goal of building value in their property.

“One of the things the buyer’s agent said to me and it’s just stuck out in my mind is that the earlier you buy, the sooner you buy, then the more time you’re allowing for capital growth and timing is not as critical as just getting into the market,” he said.

“Because if you buy the right property at the right price, timing is not such an important factor.

“All three properties that he’s bought for me, we’ve actually managed to get all of them under market value, so what it means is indirectly like even already now by the time we settle, we already have some equity.”

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