Gold Coast property sector: Developers setting up own construction wings to push ahead with towers
The Gold Coast’s peak construction body is calling for greater clarity about the impact of developers becoming their own in-house builders.
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The Gold Coast’s peak construction body is calling for greater clarity about the impact of developers becoming their own in-house builders.
Master Builders Queensland Gold Coast boss Adam Profke said there were many questions and concerns surrounding the “emerging model” which is now being used by several prominent developers.
A spike in the collapse of construction companies in the past two years has accelerated the trend towards the business model, which was already being practised by major builders including Harry Triguboff’s Meriton Group and John Kearney, the developer behind Immerse Projects and Greyburn Constructions.
But Mr Profke said there were flow-on effects which were yet to be “ironed out” that worried many construction workers.
“There are some things which need to be solved about what this will look like in this model going forward,” he said.
“We have a lot of questions about what it means for subcontracts, the licensing regime more generally and we have concerns for apartment owners going forward.
“If you have a full-service builder, they come back in and fix it if there is a problem but under some of the models being used by developer-builders, it leaves the body corporate having to take up the matter with every subcontractor going forward.
“We have a lot of questions and because it is an emerging model, we are not sure what it is all going to look like but we need to have a conversation about what happens going forward.”
Mr Profke said he has questions around the security of payments for contractors.
“It is about ironing it all out so everyone understands what this new landscape will look like.”
The Bulletin on Monday revealed Homecorp boss Ron Bakir, whose projects were directly impacted by the 2022 collapse of Robina-based building giant Condev, was founding his own construction team.
Among those developers who have their own construction wings are Mosaic, Marquee, Siera group, Morris Property Group, Arena Property Group, Alroe, Highlife Homes and Amalgamated Property Group.
The number of Queensland builders to have gone bust in the past two years has increased 194 per cent on previous years.
It comes as key property figures warn buyers to research developers behind projects before buying off-the-plan.
GV Property Group principal Antonio Mercuri said developers with their own building arms were a safer bet in the current market.
“If you see a high or midrise under construction on the Gold Coast at the moment, chances are, they’re a builder developer,” he said.
“There are so many builders collapsing in Queensland at the moment under that rising cost of construction, and that’s leaving limited competition in the market.
“It’s forcing a change and as a result, many developers have started building themselves.
“They’re the ones delivering on these projects – it’s no coincidence.
“If someone is looking to buy ‘off the plan’, I’d strongly urge them to do their
homework and check if they’re either a builder developer, or in the least, have a
builder who they’ve worked alongside in the past.”
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Experienced developers are founding their own in-house builders in a bid to unlock pent-up supply in the city and reduce the risk of their projects stalling.
A spike in the collapse of construction companies in the past two years has accelerated the trend towards the business model, which was already being practised by major builders including Harry Triguboff’s Meriton Group and John Kearney, the developer behind Immerse Projects and Greyburn Constructions.
Homecorp boss Ron Bakir, whose projects were directly impacted by the 2022 collapse of Robina-based building giant Condev, said the state of the construction sector had improved in the past 18 months when inflation, high material costs and labour shortages gripped the sector admitted he and many of his colleagues were now choosing to create their own in-house building wings.
“Being a developer and a builder are different but those who can put a team together have an advantage,” he said.
“We are building our own stuff going forward because it is much safer for us and companies which have strong balance sheets and a pipeline of good products.
“There is risk but the greater risk is outsourcing it and the builder not being around later.”
Homecorp is currently completing its Eve tower at Labrador with builder Hutchinsons while the company prepares to break ground on its next tower at Varsity Lakes.
Work on the 270-unit complex will begin before Christmas and will be aimed at the affordable market, something Mr Bakir last week said few other developers were focusing on.
Research by real estate firm Colliers International which was released earlier this year revealed two thirds of respondents to its survey said they didn’t know if they could trust developers to bring the project while fears were growing over the rapidly dropping number of available units.
Aniko Group, headed by managing director George Mastrocostas, has long maintained an in-house construction team and said they held many benefits.
“By managing construction internally, we ensure that our development vision and high standards are seamlessly integrated into every project,” he said.
“This approach enables us to maintain exceptional quality, adhere to timelines, and manage costs effectively, which directly benefits buyers through reduced prices and added value.
“By controlling construction processes, we’ve improved project timelines, minimised delays, and ensured that quality meets or exceeds client expectations.
“This internal approach has also facilitated smoother project execution and better overall performance.
“As industry demands for efficiency and sustainability grow, our longstanding experience with an integrated construction team positions us to continue leading in delivering high-quality housing solutions.”
Labour shortages remain a key issue for developers, with many experienced construction firms booked out years in advance.
The 2023 Gold Coast Dwelling Supply Study, released last year, warned a large number of the houses proposed for the Gold Coast are unlikely to ever get built for economic reasons and other solutions will be needed to ensure housing catches up with the population growth.
Mosaic Property Group set up its own construction wing more than a decade ago and said it had delivered long-term dividends
“Establishing a construction arm and building its capability particularly in terms of scale has taken significant time, investment and expertise (but) we have never failed to deliver any project we have put to market,” founder Brook Monahan said.
“We feel fortunate to be among the few developers who can assure delivery of every project we put to market as a result of our unique end-to-end business model which includes our own construction arm and has seen us complete hundreds and hundreds of millions of dollars’ worth of projects across southeast Queensland.”
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