Gold Coast construction giant Condev’s plea to developers for funding ahead of critical meeting
An under-pressure Gold Coast construction giant is making a final desperate plea to help keep the company alive ahead of a make-or-break meeting to decide its fate.
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For all the latest on this story, including what happens after Condev meets on Monday, March 14, and union reaction to the company’s struggle, click here.
An under-pressure Gold Coast construction giant is making a final desperate plea for the developers it builds for to help keep the company alive.
Condev Construction is battling to survive and faces going into administration after what it calls the “perfect storm” of spiking material costs, flood damage and the impact of the Omicron Covid wave.
Company bosses Steve and Tracy Marais will on Monday afternoon meet with some of Australia biggest developers and ask them to lend the struggling company millions to ensure its survival.
Condev, which helped build much of the 2018 Commonwealth Games infrastructure, has 13 projects currently under construction in southeast Queensland, with six on the Gold Coast.
The Gold Coast projects are valued at more than $500m alone.
Ms Marais told the Bulletin the company was still solvent but needed help.
“We are seeking a resolution and we cannot do that alone – we need to work together,” she said.
“This is not something the building industry is renowned for but it would be in the best interests of all parties, our clients and our staff
“There is nothing more important than a resolution and I guess that depends on what that looks like.”
Among the projects Condev is building on the Coast are the $200m Capital Court towers at Varsity Lakes, the $140m Alegria at Palm Beach, the $77m Natura at Burleigh Heads and $76m Allure at Chevron Island.
Every developer the company is partnered with have been invited to the “high-level” meeting which will take place at legal offices in Surfers Paradise on Monday afternoon.
Some developers are flying in from NSW and Adelaide for the meeting during which they will review Condev’s finances.
Sources close to the negotiations said there was goodwill from some of the developers but others were less certain: “Some of them will be happy to give a few million but if they see the finances and decide they’re throwing good money after bad they will terminate the contracts and look elsewhere.”
The Bulletin understands the talks are the result of months of ongoing concerns about the company’s financial state.
According to the company‘s latest financial report lodged with ASIC, Condev made a loss of $358,772 in 2021 compared to a profit of $536, 332 the previous year.
Revenue climbed from $175m to $181m over the period with the company noting it continued to procure work from national developers despite the impact of Covid-19.
Ms Marais insisted all subcontractors, suppliers and staff had been paid to date.
Her message to subcontractors on Monday morning was simple: “Please come to work today.”
The builder’s precarious future comes just weeks after administrators were appointed to national firm Probuild and liquidators were appointed to Hitec Glazing, a company which had worked on projects across the southeast.
Spyre Group director Andrew Malouf said he had been “working very closely” with Condev to see how he could assist them.
“We are only two months from completion and we will do everything in our power to deliver Natura to our customers in a timely manner,” he said.
“Spyre Group is in a very strong financial position and we will work alongside Condev to ensure the project is delivered without interruption.”
Property Council of Australia Gold Coast chairman Matthew Schneider said the multi-billion dollar sector was hopeful of a positive outcome.
“While we are seeing continued strength in demand across the property sector on the Gold Coast, we have seen the complexity of the operating environment in which projects are delivered intensify,” he said.
“We are pleased to see the industry exploring ways to work together to respond swiftly to those challenges as they emerge and to keep delivering on the opportunities that exist across the Gold Coast.”
City planning boss Cr Cameron Caldwell said rising construction costs were putting increasing pressure on builders.
“This is expected to continue for the foreseeable future,” he said
“Condev are a Gold Coast born-and-bred company and we are hopeful they can navigate their way through these challenging times.”
The Bulletin in February warned struggling Gold Coast builders were dipping into their own pockets to honour housing contracts.
The shortages are primarily the result of worldwide supply chain issues as well as the significant increase in construction activity in the past 18 months.
Materials in short supply include wood and steel, with the latter now costing up to $2300 a tonne.
Master Builders Gold Coast boss Adam Profke, who has been ringing alarm bells for months about the dangers increasing costs had for local builders said the economic pain was set to continue in the wake of the war in Ukraine.
“A lot of the commercial builders were not immune to the floods but there is going to be big knock-on effect now – a lot of the raw timber used in construction here actually comes from Russia,” he said.
“2022 is going to be a really tough year and while a lot of people have been hanging on, you can only keep going for so long.
“Condev is a large company and it would be crazy to say there wouldn’t be a massive knock-on effect if the worst was to happen.
“We’re all hoping for the best.”
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