A major apartment complex development in Queensland has fallen into receivership, the latest victim of the state’s lacklustre property sales.
Price growth in Queensland remains depressed, with first home buyers still cautious after major banks signalled they are prepared to raise rates outside decisions made by the Reserve Bank.
According to official documents, the company behind the $170 million Alderley Square apartment development, Alderley Village, was placed in receivership in November.
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Receivers Korda Mentha were contacted this morning by SmartCompany, but no reply was available prior to publication. The Alderley Village development office was also contacted, but the line appears to be disconnected.
Construction of the development was expected to begin this year, but the development has now collapsed with $12 million in debt, according to the Australian Financial Review.
The project was reportedly backed by private South Africa-based investors. The developer behind the property is PCN Projects, which has offices in both Australia and South Africa.
That company was also contacted this morning, but no reply was available prior to publication.
The development is the latest within Queensland to fail, with a number of properties and resorts going under during the past few years. Apartment supply has exploded in the last decade, especially on the Gold Coast, which has put more downward pressure on prices.
The Alderley project would have offered over 200 new residential apartments. Reports indicate $55 million worth of apartments were sold during the first 12 months of sales, but transactions slowed soon after.
The collapse comes as home loan arrears in Queensland have also risen above those in other states.
SQM Research managing director Louis Christopher says there has been a definite slowdown in Queensland, with stock continuing to rise causing more price pressures.
“We went through 2011 when there was a period in which house prices fell in Brisbane, and the ABS says there was a 9% fall from peak to trough across 2010-11.”
“That’s a substantial correction. It’s caused enough stress for property developers who have done work based on contracted prices and for those who have to offer a buffer on those prices as well.”
Christopher says developers have had trouble gaining finance, even during the past year or so, and that he’s heard reports of banks breathing down developers’ necks – even when all the finances check out.
“There is quite a lot of stress for new property developers, particularly those working on a thin buffer of prices. When developers start making even a small loss, it can destroy them very quickly.”