The Gold-Coast based Condev announced it had entered liquidation after failing to secure a reported bid from developers to the tune of $25 million.
The decision stems from challenging market conditions, including the exponential increase in materials like timber amid choked supply chains worldwide.
Condev founders Steve and Tracey Marais said in a statement they were “absolutely devastated for the Condev family of employees, our tradespeople and our affiliates”.
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Staff were told not to come into work today in an email sent yesterday, with the couple explaining a last-ditch meeting with developers did not “achieve the outcome we’d hoped”.
The construction company mostly operated in Queensland on a variety of projects from apartments to warehouses, with question marks now lingering over the Cannes Waterfront in Surfers Paradise, The Brookes Residences in Varsity Lakes, Natura and Brake Street both in Burleigh, and the Jindi Apartments in Palm Beach.
The pandemic’s “triple threat” to construction companies
It comes just one month after Probuild brought in liquidators to the dismay of some 750 employees, after a problem-laden high-rise project drove the company into debt.
At the time, CreditorWatch CEO Patrick Coghlan told SmartCompany Probuild had become the latest victim of the pandemic’s “triple threat”.
“You’ve got big supply chain delays because raw materials aren’t available, you’ve got material price increases, which is either part of the supply chain issue or the result of inflation (and that’s where it can get really dangerous, is if a builder doesn’t quote properly as it can substantially blow out their margin) and three, there are a lot of project delays due to labour shortages from COVID-19,” he says.
In addition, last year’s state and federal stimulus packages saw demand for construction and building soar — but with other countries also using housing to spur economic recovery during COVID-19, the overseas supply of timber quickly came under strain.
When a construction company collapses, Coghlan continued, it sends “ripples up and down the supply chain” of the deeply connected industry.
“There’s a significant number of contractors, multiple contractors for every project — you’re talking hundreds, if not thousands, of other businesses that are connected to Probuild and Probuild projects,” he said.
However, there appears to be less bad blood over the liquidation of Condev. A lawyer representing the owners described the situation as “extremely stressful for Steve and Tracy who are highly regarded in the industry and the Gold Coast community as tier one corporate citizens”.
One subcontractor told The Australian they were confident management had tried their best to act with integrity and honesty.
“Obviously they owe us money and it’s not ideal but they didn’t do this on purpose. They’ve just gone in too keen [underpriced] on some jobs and it hasn’t worked out,” they said.
“We just need a quick resolution so that other builders can take over the jobs. The sooner life gets back to normal, the better.”
The contractor added that “it could be the tip of the iceberg as far as the way the industry is going”.
Last December, two other high-profile collapses hit the headlines — BA Murphy, which left almost $11 million owed to contractors, and Privium, which had $24.6 million in total liabilities.