Large residential projects languishing because of labour shortages

Veteran Queensland developer Kevin Seymour.

Queensland’s labour shortage, sparked by a multibillion-dollar infrastructure and mega-project rollout, has left high-profile residential projects languishing due to developers being unable to find builders.

While the materials shortages that plagued the industry during the pandemic has improved, there continues to be an extreme labour shortage, either delaying or stopping projects in their tracks at a time of rapid population growth and record low vacancy.

One of Queensland’s wealthiest men, Kevin Seymour, says even he can’t secure a builder to start his next Brisbane residential project, which was launched almost two years ago.

Mr Seymour, whose Seymour Group has been behind some of Brisbane’s most recognisable developments, said he did not know when construction would start on the sold-out 26-apartment building called ‘‘The Peninsula’’ in New Farm because “no builder will commit” due to the labour shortage in the state’s construction industry.

“You can’t get a builder to lock in a price,” Mr Seymour said. “Secondly, the way labour is, no one knows how long a job will take to complete.

“The current state of affairs is unprecedented in my 55 years in the ­industry.”

Mr Seymour said he was seeking prices from a number of builders, but “they all want to pass the risk on to us”.

“Builders are too gun shy after all the money they’ve lost over the past three years,” he said. “I’m worried about the future of the industry. The biggest problem is the cost to the consumer because developers can’t absorb the (rising) costs – it’s got to be passed on – and the cost of housing is going to get totally out of control.”

Developer Don O’Rorke “can’t see an end to the capacity issues”.

The state and federal governments are engaged in a multibillion-dollar rollout of Queensland infrastructure projects, hospitals, prisons and major road works, including Brisbane’s Cross River Rail which has blown out to $6.3bn.

There are also many private sector mega-developments that have attracted tradies, including Destination Brisbane’s $3.6bn Queen’s Wharf Casino projects, the first stage of which will open in April next year, while work has started on Dexus’s $2.5bn city-changing Waterfront Brisbane development.

Consolidated Properties chairman Don O’Rorke said the difficulties surrounding the construction sector in Queensland were the worst he had seen.

“I can’t see an end to the capacity issues we have at the moment, and we haven’t even started the Olympic build yet,” he said.

“It’s mostly a labour issue because labour is in such short supply.” Mr O’Rorke said Consolidated Property’s $450m Monarch Residences project in Toowong was on schedule, but the next stage of its $850m Yerongpilly Green masterplanned community had been stalled.

“We’re unable to get our next approved apartment stage – Garden House and Park House – up and running because construction it is so difficult,” he said.

Mr O’Rorke said he was fortunate because his company had a strong relationship with Australia’s largest private builder, Hutchinson Builders, that went back some 35 years.

An artist’s impression of the $450m Monarch Residences project in Toowong.

“We can get out things, but they’re expensive, and it does take longer to happen than it should do because construction productivity is probably the lowest it has ever been,” he said.

“Hutchies has a great statistic. They have $10bn worth of projects that people want them to do, and they have a current turnover of about $3bn, so there is $7bn of unfulfilled demand and that is a capacity issue.”

However, Mr O’Rorke said it was not all doom and gloom.

“It’s a problem, but it’s a good problem. It’s a problem of growth, and we should be thankful for that. We shouldn’t complain too much, but we just need to know how to deal with it,” he said.