CreditorWatch says Gold Coast businesses most at risk of collapsing in QLD

Businesses on the Gold Coast are among the most at risk in the country of collapsing in the next 12 months. See which other Qld regions made the hit list.

Queensland’s entertainment capital was the region most at risk of businesses defaulting on payments over the next 12 months, leading to a spike in collapses, according to a leading credit reporting agency.

Gold Coast suburbs took the top four places in Queensland in the latest CreditorWatch Business Risk Index, which identified the risk of default increasing in almost every region across Australia with 5000 or more registered businesses at most risk.

CreditorWatch chief economist Anneke Thompson said the probability of default was led by the food and beverage sector, followed by arts and recreation and education and training.

“Higher rents in CBD locations, as well as increasing costs and strong reliance on human capital are the biggest drivers of this,” she said.

“While demand is still very good, a very high cost environment will be challenging for many hospitality businesses.”

In Queensland, businesses in Surfers Paradise, followed by Ormeau-Oxenford, Southport and Gold Coast Hinterland were most at risk of defaulting on payments.

According to CreditorWatch B2B trade payment defaults in Australia showed a dip in September but remained well above levels seen 12 months ago during Covid-19, and were a lead indicator of future defaults.

Around 25 per cent of businesses with a default ends up in administration within 12 months which additionally puts pressure on the supplier who will now have to shoulder that bad debt.

Conversely five Queensland regions outside of South East Queensland’s main population centres had the lowest probability of default – Darling Downs-East, Cairns-South, Townsville, Rockhampton and Toowoomba.

Higher CBD rents and human costs are major drivers of defaults.

In the report CreditorWatch said while businesses were currently experiencing good demand and trade conditions, economists were now waiting on the full impact of interest rate rises to hit consumers.

The report said there were some early signs that business conditions have peaked.

Ms Thompson said markets were “very reactive” to any and all data points, both domestic and global, as businesses and investors tried to get a read on what the global economy could look like in 2023.

“Central banks have been on a warpath against inflation for some months now, and there is growing fear that this could tip some economies into recession,” she said.