Not enough builders in South East Queensland, says developer Don O’Rorke

Key projects in Queensland are stalled due to a lack of builders. Picture: NCA NewsWire / Damian Shaw

There are not enough builders in South East Queensland to deliver the amount of residential construction and infrastructure needed for the region’s growth over the coming decade, says industry veteran Don O’Rorke.

The Consolidated Properties managing director said that in the wake of several major private builders collapsing in the state over the past year, the development fraternity was feeling increased competition, not just with each other, but also with the government ahead of the Olympics.

“South East Queensland does not have sufficient construction capacity to deliver the projects that are current,” Mr O’Rorke said.

“These projects include the Olympics, the state building program of schools and hospitals and infrastructure, and the private sector projects such as apartment and office buildings and shopping centres.

“It is not a given that there will be a builder available.

“As an economy, all three levels of government and industry need to work together to increase the capacity of our construction sector.

“Queensland is a high-growth state. These are normal problems for growth, and although they are challenging, they are good problems. Because, it’s a far better situation than being in a low growth economy like Japan.”

Gold Coast-based construction company GCB Constructions was the latest builder in the region to enter administration last month, leaving about 500 units in limbo and subbies out of pocket.

The decision follows the Queensland Building and Construction Commission restricting the business’s licence in June, stopping the builder from providing tenders or quotes without the approval of the watchdog.

Builder Scott Hutchinson and developer Don O’Rorke on site at their new Monarch development at Toowong. Picture: Lachie Millard

A meeting with creditors will be held on Monday but the way forward could be complex as the administration has triggered secured creditors to call in Cor Cordis as receivers.

The receivership covers some key GCB entities, including properties, which have been caught up in the demise of the building arm.

Other high-profile builders, including Condev, have also collapsed in the past 18 months in the fallout from the construction boom.

Consolidated Properties has a decades-long relationship with Hutchinson Builders, which it exclusively uses to deliver its projects. Mr O’Rorke said developers should actively be looking to share some of the risks in the delivery of a project to ensure the best result.

“Our experience with Hutchies over a 35-year period is that you need to have empathy for the builder’s needs,” he said.

“But a lot of other people go into the market deliberately trying to buy a dollar’s worth of work for 90c, and those days are over.”

Fixed price contracts signed before the pandemic have caused headaches for the industry, which has had to deal with soaring material costs and labour shortages at the same time demand for builders surged.

“When you’re setting the risk allocation program in the building contract, it’s an absolute given that there needs to be some risk sharing with the builder to deliver your project,” Mr O’Rorke said.

The current imbalances have seen insolvencies in the sector nationally spike by more than 75 per cent in the past year alone on ASIC’s figures.

Credit agencies such as CreditorWatch expect this to continue trending upwards in the coming year despite the cost of some materials starting to moderate.

Additional reporting: Ben Wilmot