This article is from the Australian Property Journal archive
THE new year has kicked off on a low note for the construction industry with property developer Bensons Property Group, which has $1.5 billion worth of projects, entering voluntary administration, just a fortnight after Chinese-backed Melbourne-based developer APH Holding went into administration.
At the beginning of this year, Bensons Property Group has appointed Craig Shepard and Sebastian Ham of Korda Mentha as voluntary administrators.
At the same time, Keith Crawford and Matthew Caddy of McGrath Nicol have been appointed as receivers and managers of BPG to oversee the ongoing operation of the business.
Under a proposal to be put to BPG’s creditors, it is intended that BPG will continue to trade during and beyond the administration and receivership period.
BPG’s managing director and CEO Rick Curtis said BPG is a proud property developer that is in the business of delivering homes for Australians to live in and own, but it needed this reset so that the company can continue.
“This was not an easy decision, however, I want to assure our people that there are no plans for redundancies,”
Curtis adding that importantly, BPG does this with the support of its founder, its lenders and key investors.
Curtis said BPG is also committed to delivering on its $1.5 billion development pipeline, which is over 1,000 homes across Australia.
“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.
“We currently have a development pipeline worth well over $1.5 billion, and I am confident that we will get through this period and come out of it as an even stronger business.”
This appointment only relates to BPG and does not extend to any other entity within the broader group. Importantly, all the projects currently being managed by BPG – many of which are already under construction – are not affected.
BPG’s move comes after Chinese-backed Melbourne-based property developer APH Holding went into administration in the lead up to Christmas, putting in doubt billions of dollars worth highly ambitious of projects, in the biggest collapse since Caydon and closing the year with a stark reminder of the continued challenges faced by the industry.
Construction costs remain the biggest hurdle
Curtis said 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,” he said.
According to the Centuria Bass 2024 Australian Property Development and Finance Index, construction costs remain the number one handbrake on new projects.
Construction pressures are expected to remain “stubbornly” elevated until at least 2027, according to WT’s latest Australian Construction Market Conditions Report, although a recovery in activity and the broader economy should become “quite apparent” before then.
