A billionaire property developer is collapsing, blaming Melbourne’s Covid-19 lockdowns and rising interest rates for a slump in sales
- Caydon Property Group in the hands of recipients citing the impact of Covid lockdowns
- The Melbourne-based developer is behind a number of high-profile projects
- The famous Nylex site in Cremorne, in the inner-eastern part of the city, has been redeveloped
Another property and construction group has hit the wall blaming the impact of the Covid-19 pandemic, with Caydon Property Group appointing receivers.
The multi-billion dollar Melbourne-based real estate group is behind a number of high-profile projects in the southern capital, including the redevelopment of the Nylex landmark in Cremorne, in the city’s inner east.
Non-bank lender OCP Asia, which holds collateral for Caydon’s assets and properties, appointed McGrathNicol as receiver on Tuesday, the Australian Financial Review reported.
The trustees will deal with completed residential and commercial properties, development properties and land holdings from Caydon, which was founded by CEO Joe Russo 20 years ago.
Caydon Property Group was behind the redevelopment of the Nylex landmark in Cremorne in Melbourne’s inner east
Caydon Property Group founder Joe Russo blamed Melbourne’s “extended” Covid-19 lockdowns, along with escalating construction costs, supply chain delays and rising interest rate pressures as one of the reasons for the bankruptcy
Two projects still under construction, HOME in Alphington and Due North in Preston, will be completed and settled despite the bankruptcy, according to the insolvency practitioners.
Mr Russo blamed Melbourne’s “extended” Covid-19 lockdowns as well as escalating construction costs, supply chain delays and rising interest rate pressures as one of the reasons for the bankruptcy.
“Since Caydon was founded we have completed some amazing projects including over 3000 apartments, hotels and offices of which I am very proud,” said Mr. Russo.
“Unfortunately, Caydon has had to deal with one difficult market situation after another in recent years. The latest and truly challenging challenge we faced was the pricing factors affecting the Australian property and construction industry.
“The significant disruption to our business caused by two years of Covid-19 lockdowns in Melbourne has created business uncertainty and severely impacted sales.”
“The significant disruption to our business caused by Melbourne’s two-year Covid-19 lockdown has created business uncertainty and severely impacted sales,” Mr Russo said
Soaring material costs, choked supply chains, soaring fuel and vehicle prices, difficulties in hiring staff and high wages all helped destroy the profitability of some Australian construction and development companies
Mr Russo said the company will work closely with the insolvency practitioner to minimize “disruption” to stakeholders.
The receiver said he will work to achieve “the best possible outcome” for all parties by exploring options for the development and/or disposal of Caydon properties
The collapse follows a string of recent bankruptcies by Australian construction companies.
Rising material costs, choked supply chains, rising fuel and vehicle prices, difficulties in hiring staff, and high wages all helped destroy corporate profitability.
Builders Privium and BA Murphy both went into liquidation late last year, while major builders Condev and Probuild also went bust earlier this year.
Inside Out Construction, Dyldam Developments, Home Innovation Builders, ABG Group, New Sensation Homes, Next, Pindan, ABD Group, Pivotal Homes, Solido Builders and Snowdon Developments are some of the other companies in the industry that will go under.