Major developer Bensons Property Group in voluntary administration
Another major Australian property developer has entered administration, citing difficult conditions in the country’s ailing construction sector.
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Major Australian developer Bensons Property Group has entered voluntary administration, but says it will not impact any of the company’s current projects.
The company has cited tough conditions in the construction sector has seen them go bust, including higher interest rates and increasing construction costs.
Craig Shepard and Sebastian Ham of Korda Mentha have been appointed as voluntary administrators, with Keith Crawford and Matthew Caddy of McGrath Nicol to oversee the ongoing operation of the company as receivers and managers.
A statement from the company said under a proposal to be put to BPG’s creditors, it was intended the company would continue to trade during and beyond the administration and receivership period.
“This will ensure BPG’s employees, trade creditors and people who have purchased apartments are protected, and its $1.5 billion project development pipeline will be delivered, which means over 1000 new Australian homes,” the statement read.
“This appointment only relates to BPG and does not extent to any other entity within the broader group.
“Importantly, all projects currently being managed by BPG – many of which are already under construction – are not affected.
“The property development sector continues to go through an extremely difficult time, particularly post-Covid.
“We believe this process provides BPG with the best opportunity to get through this period and come back stronger, with more Australian homes built in the years ahead.”
Bensons Property Group managing director and chief executive Rick Curtis said they currently had more than $1.5 billion in projects coming through, and would work with developers to complete them.
“I also want to assure the hundreds of Australians who have purchased apartments in projects that we are managing, that we are taking this action to help protect their interests and the interests of BPG,” he said.
“This was not an easy decision, however, I want to assure our people that there are no plans for redundancies.”
BPG has joined the growing ranks of developers who have faced financial difficulties in the tough post-Covid construction sector.
Bensons Property Group is not the only large property group that has struggled in the post-Covid era.
Several leading names in the industry to have also battled financial difficulties include Clough Group, Probuild, and Porter Davis Homes.
Clough Group - the largest among those names - went into voluntary administration suddenly with $10 billion worth of government projects that could have been in trouble months earlier, a report to creditors revealed in February last year.
It was eventually acquired by WeBuild.
In total more than 2800 Australian construction companies went into insolvency in the 2023-24 financial year, representing the greatest proportion of company collapses, according to ASIC data.
The large-scale collapses come as Covid disruptions cause labour shortages and rising raw material costs put pressure on the traditionally low margin industry.
According to a statement released by Master Builders Australia earlier this month, another issue plaguing the industry is the amount of time lost to worker disputes.
Referencing industrial disputes data from the Australian Bureau of Statistics, the building company claimed 59 per cent of total working days lost in the economy in the September quarter occurred in the building and construction industry.
It reported that figure reached 27,500, and had more than tripled from the previous quarter.
“In the middle of a housing and cost of living crisis, we need industry to be working at its peak,” Master Builders deputy CEO Shaun Schmitke said.
“Long and unnecessary industrial disputes lead to higher costs and longer wait times for much-needed housing and supporting infrastructure.”
Founded by Elias Jreissati in 1994, Bensons is currently building more than 1337 apartments across Tasmania, Victoria and Queensland, as reported by The Australian.
These projects include the construction of an almost-$485m 41-level tower on the Gold Coast’s Chevron Island, and another 740 apartments across Melbourne’s suburbs, with a collective value of $452m on completion.
While some of these homes have been completed, others remain under construction or have planning approval but are still awaiting a sales process before work can begin.
As these builders continue to struggle, the federal government has set the ambitious target of building 1.2 million new homes by 2019.
Originally published as Major developer Bensons Property Group in voluntary administration
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