ANALYSIS: The tier one builder’s Victorian arm went into administration on Friday, leading to questions over the company’s ability to take on projects in Perth.
The fate of Roberts Co’s Victorian arm has created a cloud of uncertainty over the tier one contractor’s future in Western Australia.
Roberts Co today reassured Business News that a move to place its Victorian arm into administration was made to safeguard its WA and NSW businesses.
“The Victorian operation has incurred unsustainable losses, and continuing to subsidise it would jeopardise the ongoing performance of our remaining operations,” Roberts Co chief executive and managing director Emma Shipley said.
“All our WA projects are unaffected by this decision and will continue business as usual.”
However, the move sent shockwaves through the industry and has left developers wondering whether the builder has the firepower it was initially anticipated to bring.
Late on Friday, administrators were appointed to Roberts Co’s Victorian operations, following work being halted on the nation’s largest warehouse development.
This left what is understood to be hundreds of millions of dollars of projects in limbo, including Amazon's multi-level warehouse in Craigieburn, Victoria.
The national commercial construction company was founded by Andrew Roberts, who is the son of late Multiplex founder John Roberts.
As one of the largest builders in the country, Roberts Co has built multi-million-dollar commercial office towers, hotels, schools and hospitals.
Its projects to date include the $119 million North Shore Health Hub for Dexus in Sydney, the $220 million 65-storey UNO apartment tower in Melbourne, and the $230 million Concord Hospital redevelopment in regional NSW.
Roberts Co entered the Perth market in 2023, in a move that was widely welcomed by industry for the contractor's potential to be a competitor to the dominant Multiplex.
Roberts Co was seen as a beacon of hope for a market crying out for more builders.
At the time, the builder announced it would build Edge Visionary Living’s $310 million The Dunes apartment project in Scarborough.
The company was recently chosen as the preferred contractor for the state government’s $1.8 billion Women and Babies Hospital, with Webuild.
Business News understands that Roberts Co is only conducting forward works at The Dunes, with Edge Visionary Living’s construction arm to complete the tower.
Edge’s expansion into construction was part of a trend of WA developers bringing builds in house.
The latest developer to do this was Golden Sedayu, which launched its own construction business to deliver apartments at its multi-billion-dollar Burswood Point development.
A key reason for many developers doing this is because of the volume of builders falling into financial difficulty and folding.
CoreLogic research director Tim Lawless pointed out the volatility of the construction industry at a recent industry breakfast.
“The liquidity pressures on the industry have been significant,” he said.
“More than a quarter [of insolvencies] over the past year have been in the construction sector, [which is] head and shoulders more than any other industry around the country.”
He added that the difficulties in procuring skilled labour and the increasing cost of labour would continue to be a pressure point for builders.
“[When you look at the] Cordell construction cost index, since the 1970s there’s [been] about five quarters where construction costs have actually fallen over that very long period of time, the reality is they’re not going to go backwards.
“There’s actually a bit of re-acceleration coming into the index, which means it’s becoming more and more expensive to build properties.”
Source: CoreLogic
While many industry commentators say small builders are at a greater risk of collapsing than larger commercial companies, recent events show that no builder is immune to the challenges facing the sector.
The demise of Probuild, Pindan and Jaxon reinforced this.
Property Council WA executive director Nicola Brischetto has been vocal on this and on the issues associated with securing larger builders.
“[The] cost of construction is affecting the whole sector, and I’m not being shy in sharing my views around [the fact] we need to really pull out all the stops in terms of workforce and getting more big tier one Builders into WA,” she told Business News.
Ms Brischetto added that the government should have an ongoing conversation with industry to ensure there was capacity within the construction sector to meet major infrastructure projects.
McGrath Nicol were appointed as administrators of Roberts Co’s Victorian operation, with a creditors meeting scheduled for March 26.
