STILL reeling from the downfall of Probuild, Australia’s construction industry has again been rocked by the collapse of Queensland building company Condev after it failed to secure a multimillion dollar rescue package from developers.
Late Tuesday Condev emailed staff and told them not to come to work on Wednesday morning as liquidators are expected to be appointed today.
The imminent appointment comes after Condev’s founders Steve and Tracey Marais met with developers in an 11th hour bid to secure a $25 million rescue funding but they were unsuccesful.
The founders said in a statement, they were “absolutely devastated for the Condev family of employees, our tradespeople and our affiliates.”
“It is with the heaviest heart that we advise that we have not been able to achieve the outcome from (Monday’s) meeting with developers that we’d hoped and the decision to proceed to the liquidation of Condev Construction is now a matter of course,” they said.
Condev has $1 billion worth of projects and the collapse comes just two weeks after construction giant Probuild called in administrators with $5 billion worth of projects.
Probuild’s parent company, South Africa’s WBHO had blamed the Australian government’s handling of the pandemic and restrictions for its predicament.
“The Australian government’s hard-line approach of managing COVID-19 through a combination of border restrictions, snap lockdowns and mandatory work-from-home regulations for many sectors, has had a considerable impact on property markets as well as other industries such as the leisure industry.
“Of particular concern is the project delivery capability of the business which has been negatively affected by unplanned COVID-19 restrictions, the contractual environment and the increased difficulty in raising guarantee facilities necessary to secure new work.
“The protracted effect of COVID-19 has delayed any meaningful economic recovery and procurement activity in Australia.” WBHO said.
However it was revealed last week that administrators are probing a $48.7 million transfer from Probuild to WBHO Infrastructure to cover losses from its major western roads upgrade project in Melbourne.
Only $5 million of the loan has been repaid whilst Probuild’s projects have either been purchased by rivals Roberts Co and Webuild, or handed back to developers PDG Corporation and Far East Consortium.
The collapse of Probuild and now Condev, has reminded the industry of the risks in the construction sector in the year ahead. Recently in Australian Property Journal’s Talking Property Podcast, commercial real estate lender MaxCap Group’s chief investment officer Bill McWilliams said the Probuild situation has highlighted the risks of construction price escalations.
Although supply chain issues were beginning ease after it was impacted by COVID-19, Russia’s invasion of Ukraine has seen global oil prices skyrocket, which is now expected to be passed on to goods including building and construction materials.
In the past week research shows construction materials costs have jumped markedly in the United States and Canada.
Latest data from the US Bureau of Labour Statistics (BLS) revealed the cost of 9 out of 15 materials has risen by over 20% and four by more than 50%.
Whilst in Canada, data from ConstructConnect shows 22 out of 26 material inputs have risen by more 20%.