Property owners left in dark over future homes as developer appointed liquidator

Another Melbourne apartment developer has abandoned several unfinished projects and left buyers in limbo. The latest scalp was appointed a liquidator on Friday, with one property expert saying it’s a dire sign of things to come.

Zealous Group in Bentleigh has been appointed liquidators.

Dozens of Melbourne homebuyers have been left in the lurch after a failed developer went bust and walked away from unfinished townhouses — and one expert says the recent industry turmoil is an ominous sign of things to come.

Zealous Group, which specialised in upscale developments across Bentleigh, Brighton and Hampton, was appointed a liquidator on Friday by the Federal Court.

The company’s fall comes after the founders of large-scale competitor, Steller, announced they were dissolving their partnership, started selling off assets, and fired 76 construction staff.

The Leader is aware of several abandoned worksites around Bentleigh railway station, which have been vacant for many weeks.

Homebuyers who have purchased Zealous properties will now be forced to claim their losses on insurance.

Property expert and advocate Catherine Cashmore said recent industry turmoil came as no surprise, after the Financial Services Royal Commission had “decimated” the development and building industry.

The Cashmore & Co Real Estate Advocates director said buyers were no longer able to secure appropriate finance.

And she said “developers had it even harder”, as the banks now insisted on pre-sales before providing finance.

The Zealous Group office in Bentleigh.

“Some developers started these developments years ago but now people can’t access finance and there’s been a downturn in the market, yet they still have to settle,” Ms Cashmore said.

“This has the potential to derail entire projects and wipe out your profit.”

In Ms Cashmore’s own development arm, 14 apartment buyers couldn’t settle last year as they were denied finance.

And Ms Cashmore said she had heard of buyers being offered discounts and bonuses from developers if they could help sell many unsold apartments in complexes.

“I wouldn’t be surprised if we hear more stories like this, but it isn’t something to be celebrating,” Ms Cashmore said.

“This has roll-on effects like higher rents, and buyers who bought in who can no longer settle.

“There might be some good (apartment) deals around...but be aware, it’s not the best investment to make.”

One of Zealous Group’s townhouse projects in Bayside.

Court-appointed liquidator David Ross of Hall Chadwick confirmed Zealous had ceased to trade and employees had been terminated.

“We have had no contact with the director and haven’t got a list of creditors,” Mr Ross said.

It’s understood former employees have also been unable to get in touch with the company’s two directors.

A “rebranding” website states Zealous Group “aimed for overall excellence in the building of residential homes, dual occupancies, apartments and commercial developments”.

The group also took out first place in the HIA 2016 Award for the Townhouse/Villa Development category.

Zealous Group’s main office phone number has been disconnected. A director has not yet responded to Leader requests for comment.

Fellow development company Steller — which specialises in mid and large-scale apartment complexes in Melbourne’s southeast and had $4 billion worth of projects in the pipeline last year — has also started selling off its assets after the partnership between co-founders Simon Pitard and Nicholas Smedley was dissolved.

It has fired 76 staff from its construction team, put at least one development on hold, and sold three of its development sites to new buyers.

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Joint venture partner Julian Gerner with Steller’s Simon Pitard on the site of the Continental Hotel redevelopment in Sorrento.

The private group will also sell off the former home of the Greyhound Hotel in St Kilda, which it snapped up last year, and has appointed Savills to sell its 1543-square-metre site at 200-204 Wells St, South Melbourne, which has an approved permit for a 20-storey development.

But John Hurst, acting for co-founder Nicholas Smedley, said Steller had not walked from any projects.

“The development sites will continue to be developed and it will be a staged process,” Mr Hurst said.

Mr Ross encouraged affected buyers to contact their insurance companies.

Homeowners can also claim losses through the government builder’s warranty insurer, VMIA, for incomplete and defective works on buildings up to three storeys or less.

Details: dbi.vmia.vic.gov.au/making-a-claim