Second building company collapse of 2023 points to challenging times ahead
A second builder for 2023 has collapsed, with Queensland's LDC joining Melbourne-based Hallbury Homes on the construction casualty list.
Less than two weeks into the new year and predictions of further turmoil in the construction industry appear well-founded, with the second casualty of year emerging in Queensland.
LDC Pty Ltd has folded, leaving almost 50 projects facing an uncertain future and creditors owed more than $7 million.
The luxury high-end builder, specialising in custom architecturally designed homes, was based in Rochedale in Brisbane’s south.
Employing 45 staff (not all full-time) and formed in 2018, LDC’s demise will affect more than 130 subcontractors and suppliers, LDC shareholders and other parties.
It follows the collapse last week of a Melbourne-based builder of a similar size. Hallbury Homes became the first casualty of 2023, lapsing into administration after 30 years of business, while operating 50 projects on 42 sites in the metropolitan area.
In an exclusive interview with API Magazine, the Urban Development Institute of Australia’s National President, Maxwell Shifman, said 2023 shaped as a difficult year for the building sector, with “more building companies expected to go under”.
Liquidator Bill Karageozis, Managing Director of Mcleods Accounting, took control of LDC on Friday. The LDC company website and social media pages are no longer active.
“We’ve reached out to the Queensland Building and Construction Commission (QBCC) and they’re aware of the company going into liquidation,” Mr Karageozis told media.
“They will contact the lot owners who have had partially completed contracts. We will work with the QBCC and make sure they get what they need.”
“We are looking into the affairs of the company and see why it went down and try to get as much money as possible for the people who are owed money,” Mr Karageozis said.
The construction industry has seen a spate of collapses, as rising labour costs, extreme weather, global supply chain issues and materials shortages have hit them hard.
At least 20 construction companies in Australia folded in 2022.
Dyldam Developments, Hotondo Homes franchise Tasmanian Constructions, ABD Group, Privium BA Murphy, Pindan, Oracle Platinum Homes, Pivotal Homes, Inside Out Construction, Home Innovation Builders and New Sensation Homes have all gone bust recently.
Tough times ahead for builders
In further portents of troubled times ahead, building approvals have fallen for the third consecutive month. The value of total building approvals fell 1.5 per cent in November, following a 0.4 per cent decrease in October.
Grant Warner, CEO of the Australian Institute of Quantity Surveyors, joined the UDIA in saying the stage was set for further building industry collapses in 2023.
“Fixed-price contracts that fail to meet inflation and plan for contingencies like Covid, worker shortages and logistics disruptions, are causing construction firms to become unprofitable,” he said.
“Electricity cost hikes and new building standards are adding further strain to an industry with rapidly shrinking margins.”
Mr Warner also pointed to construction costs having risen 20 per cent in the financial year 2021-22, while prices of some materials, like timber, rose by more than 40 per cent in a year.