Lendlease imposes a freeze on hiring as the development market sours

The property giant says its decision to halt taking on new employees is reflective of the tough conditions faced by developers.

Lendlease chief executive Tony Lombardo. Picture: John Feder

Property giant Lendlease has frozen its hiring due to tough conditions for property developers and concerns about rising costs across the building industry.

The company is dealing with the slowing economy and pressures created by large infrastructure projects in Australia, as well as the fall off in demand for homes in land estates as higher interest rates bite.

These forces have been partially offset by the company’s success in selling luxury apartments at Sydney’s Barangaroo South and One Circular Quay, as well as big project wins like the $1.7bn revamp of the Queen Victoria Market in Melbourne.

But the cost capping moves are part of a strategy by chief executive Tony Lombardo to permanently trim head office expenses while ramping up projects around the world.

The company announced a global recruitment freeze for six months citing severe economic conditions, according to messages obtained by The Weekend Australian.

The exception would be for project roles – but other jobs could require the chief executive to sign off on them.

“As part of our always-on focus on managing costs and overheads, we’ve paused recruitment for particular roles within the company,” a Lendlease spokesman said.

“In line with our stated targets to grow funds under management, execute against our development pipeline and manage our construction backlog, the recruitment pause does not apply to budgeted project roles.”

Two years ago the global building and development company opened the corporate restructuring season by culling between 300 and 400 staff as it reshaped its business. The cuts were undertaken worldwide but the bulk were made at the company’s headquarters in Sydney as it targeted about $160m worth of annualised cost savings.

The once high-flying Australian developer is also in the firing line of shareholder activists who want the company to cut costs and restructure its balance sheet even more deeply. It is selling off a stake in its $17bn land estates business and another slice of its retirement business.

Lendlease in May warned of tough conditions for its local housing estates as it sold down more of its exposure to US military housing assets. The company sold a 21 per cent interest in its US military housing asset management income stream to an existing partner for a cash consideration of $126m.

Lendlease has come under pressure from activist investors on its register to simplify its operations, including a wholesale fund run by the listed HMC Capital which took a near 3 per cent stake. Sharemarket investors Allan Gray and Tanarra Capital also hold stock.

But conditions are tough. Lendlease Australia head Dale Connor this month said that more companies would “go broke” as they were caught in the crossfire of high demand spurred by massive infrastructure rollouts.

Lendlease is examining taking on partners across its project book and speeding up developments around the world as it attempts to stave off the impacts of the slowing global economy.