{"id":42281,"date":"2023-02-15T13:19:22","date_gmt":"2023-02-15T00:19:22","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=42281"},"modified":"2023-02-15T13:19:22","modified_gmt":"2023-02-15T00:19:22","slug":"major-sydney-builder-folds-owing-up-to-50-million","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/major-sydney-builder-folds-owing-up-to-50-million\/","title":{"rendered":"Major Sydney builder folds owing up to $50 million"},"content":{"rendered":"

PHOTO: The sun has set on another builder, with EQ Constructions in Sydney going into administration<\/strong><\/p>\n

REPUBLISHED WITH PERMISSION | API MAGAZINE<\/a><\/p>\n

Sydney-based EQ Constructions has become the latest builder to collapse and join the ranks of the dozens that have folded in recent years.<\/p>\n

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Millions of dollars in debt owed to hundreds of creditors, dozens of building industry jobs threatened, and a number of large projects now at risk.<\/p>\n

In what is becoming an increasingly common scenario in Australia\u2019s construction sector, a major apartment developer in New South Wales has lapsed into administration.<\/p>\n

EQ Constructions, which employs around 40 staff and also trades under the name EQ Projects, has collapsed owing at least $40 million, and as much as $50 million, to between 400 and 500 creditors.<\/p>\n

Apartment complex projects are now in jeopardy in Parramatta, Bowral and other regional centres throughout the state. The company had also won a $600 million residential development bid to build hundreds of apartments in\u00a0Zetland<\/a>, in Sydney\u2019s south.<\/p>\n

EQ Constructions\u2019 apparent demise is the latest in a lengthy list of building company collapses that have marred the industry. It is the second this month, after Victorian-based company, Delco Building Group, went into administration on 2 February.<\/p>\n

At least two other building companies in Western Australia, and another in Queensland\u00a0have fallen over in the first six weeks of 2023<\/a>.<\/p>\n

Administrator says multiple projects at risk<\/h2>\n

Insolvency notices indicate that Shumit Banerjee from Westburn Advisory has been appointed to handle the administration.<\/p>\n

Mr Banerjee was quoted by other media sources as saying there are numerous projects in various stages of completion.<\/p>\n

\u201cThere are ongoing projects and these are at different stages \u2013 some are at defect liability period and some halfway through, so it\u2019s a mixed bag,\u201d he said.<\/p>\n

\u201cThere\u2019s quite a major project in Bowral, there\u2019s a large apartment block in Parramatta and the rest are scattered throughout NSW.<\/p>\n

\"construction<\/a><\/div>\n
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Material shortages throw Aussie\u2019s construction industry into disarray | WATCH<\/a><\/h2>\n<\/header>\n<\/div>\n

\u201cThe director is looking to restructure the company and offer a deed of company arrangement and no staff have been laid off \u2013 there are approximately 40-odd staff.\u201d<\/p>\n

Few signs of improvement for builders<\/h2>\n

The construction industry has seen a spate of collapses, as rising labour costs, extreme weather, global supply chain issues and materials shortages have hit them hard.<\/p>\n

At least 20 construction companies<\/a> in Australia folded in 2022.<\/p>\n

Dyldam Developments, Hotondo Homes franchise Tasmanian Constructions, ABD Group, Privium BA Murphy,\u00a0Pindan,\u00a0Oracle Platinum Homes, Pivotal Homes, Inside Out Construction,\u00a0Home Innovation Builders and New Sensation Homes\u00a0have all gone bust recently.<\/p>\n

Clough Group,\u00a0Probuild,\u00a0Snowden Developments, ABG Group and Condev have been some of the other large casualties.<\/p>\n

\"Construction<\/a><\/div>\n
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Construction sector on \u2018brink of collapse\u2019 | WATCH<\/a><\/h2>\n<\/header>\n<\/div>\n
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Numerous obstacles confront the building and real estate sectors in 2023, according to UDIA president Maxwell Shifman, from potential company collapses to an extended rental crisis.<\/p>\n

Even as international crises continue to wreak havoc on Australia\u2019s housing sector, building approvals tumble, and construction companies fold, there are enough signs of hope that one major builder has scored the health of the industry at 6.5 out of 10.<\/p>\n

\"Solido<\/a><\/div>\n
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Queensland company Solido Builders joins long list of construction firms biting the dust | WATCH<\/a><\/h2>\n<\/header>\n<\/div>\n<\/div>\n

Projects completed by the builder include The Lennox in Parramatta and The Pinnacle in Liverpool.<\/p>\n

\u201cThe director is looking to restructure the company and offer a deed of company arrangement, and no staff have been laid off,\u201d Mr Banerjee told media.<\/p>\n

The woes besetting the building industry do not look like lifting in the immediate future.<\/p>\n

Building approvals were down 22 per cent at the end of the year (the latest data available) and with more interest rate hikes likely, an improvement in business conditions appears distant.<\/p>\n

\"Building<\/a><\/div>\n
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Second building company collapse of 2023 points to challenging times ahead<\/a><\/h2>\n<\/header>\n<\/div>\n

There were 115,358 new houses approved for construction in 2022, down by 21.8 per cent on the 147,552 approved in 2021.<\/p>\n

The Australian Bureau of Statistics data noted a 2.4 per cent decline in house approvals in December 2022, to 8,989, the second weakest monthly performance in the last two-and-a-half years.<\/p>\n

Tim Reardon, Chief Economist, Housing Industry Association, said much of the decline between 2021 and 2022 was the expected consequence of the end of the HomeBuilder grant in 2021.<\/p>\n

\u201cThe market was also cooling as the cost of construction rose, and the change in consumer preferences due to the pandemic desire for space, eroded.<\/p>\n

\u201cThe adverse impact of the fastest increase in the cash rate in a generation will not be fully observed in building approvals data until later this year and will not hit building activity on the ground until late 2023.<\/p>\n

\"Norris<\/a><\/div>\n
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Collapsed building company owes staggering debt<\/a><\/h2>\n<\/header>\n<\/div>\n

\u201cThe significant pipeline of work that Australian builders are still completing, combined with ongoing materials and labour constraints, is creating significant lags between the RBA\u2019s hiking cycle and on-the-ground activity.<\/p>\n

\u201cThis lag from the first rate rise until it impacts employment is dangerously long in this cycle. The RBA needs to be very cautious in raising rates as the impact of their actions won\u2019t be observed in official data for nearly 18 months, in this cycle.<\/p>\n

\u201cThe multi-unit sector also contracted further between 2021 and 2022, despite the expected return of overseas migrants, students and tourists, and the ongoing tightness in rental markets.\u201d<\/p>\n

Supply issues holding construction industry back<\/h2>\n

Master Builders Australia\u2019s Deputy CEO, Shaun Schmitke, said builders hope to see a sustained increase in high density dwelling construction.<\/p>\n

Although the flow of approvals was weaker than a year ago, he said there was a turnaround on the previous month\u2019s data.<\/p>\n

\u201cAccording to the ABS, new home building approvals bounced back sharply during December 2022, with 18.5 per cent more new homes approved.<\/p>\n

\"Waterford<\/a><\/div>\n
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BUILDING CRISIS: Another building company in liquidation<\/a><\/h2>\n<\/header>\n<\/div>\n

\u201cDecember\u2019s performance was driven by higher density homes, which jumped by some 58.8 per cent during the month, while approvals for new detached houses dipped by 2.4 per cent during December.<\/p>\n

\u201cHigher density home building approvals are particularly sensitive to interest rate movements and have been on the way down over most of 2022 until a sharp jump in December.<\/p>\n

\u201cThe stronger performance of medium\/high-density home is welcome, and we hope this will be sustained as renters are crying out for more new apartments and units.<\/p>\n

\u201cLatest inflation data shows that rental costs are increasing at their fastest rate in a decade.<\/p>\n

\u201cFurther increasing the supply of new apartments and units will be crucial to addressing\u00a0housing affordability challenges in the rental market.<\/p>\n

\u201cAustralia\u2019s capacity to absorb the inward migration in the volume we need will depend on having an abundant supply of rental accommodation,\u201d Mr Schmitke said.<\/p>\n

For detached houses, the continued reduction in activity follows the achievement of record output during the pandemic.<\/p>\n

\u201cDetached house building is being held back by insufficient supplies of titled residential land,\u201d Mr Schmitke said.<\/p>\n

\u201cSince the pandemic, demand for housing in regional markets has increased significantly.<\/p>\n

\u201cThere are particular concerns that land supply bottlenecks are an obstacle when it comes to new home building that is impeding their wider development.\u201d<\/p>\n<\/div>\n<\/div>\n<\/section>\n

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Article Q&A<\/h4>\n
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How many builders have collapsed in Australia recently?<\/strong><\/h5>\n
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The demise of EQ Constructions in New South Wales has added to the tally of builder to fold in Australia in the past year or so. Four have folded in the early part of 2023, while at least 20 construction companies in Australia folded in 2022.<\/p>\n<\/div>\n<\/div>\n

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Are building approvals on the rise or falling in Australia?<\/strong><\/h5>\n
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There were 115,358 new houses approved for construction in 2022, down by 21.8 per cent on the 147,552 approved in 2021. Australian Bureau of Statistics data noted a 2.4 per cent decline in house approvals in December 2022, to 8,989, the second weakest monthly performance in the last two-and-a-half years. Although the flow of approvals was weaker than a year ago, it marked an improvement on the previous month\u2019s data.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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