Builder ABD Group On the Verge of Collapse

Melbourne-based builder ABD Group is on the verge of collapse after ceasing work on three high-profile projects, two of which have had their contracts torn up.

The Southbank-headquartered company, led by Raffaele Aiello, has completed 30 high-profile apartment projects since its inception in 2006 but has recently run into trouble—forcing sub-contractors to down tools.

ABD Group has stopped work at Bensons Property Group’s 25-level Liberty One residential tower in the inner-western suburb of Footscray.

ABD Group had completed a substantial amount of work on the development before its departure. The builder had constructed 19 levels of the building’s core as well as concrete pouring and framework on level 15.

Construction is expected to resume shortly on the 378-apartment project after the developer approached builder Hickory Group.

In nearby Spotswood, work has also come to a halt on Suleman Group’s 330-apartment Union Quarter project at 61 McLister Street.

Sources close to the ABD Group said that the company’s collapse would potentially leave between $50 million and $80 million in outstanding debt.

The company’s website and social media channels, along with its subsidiary Marcus Group and its development arm Jasmine Group, have been taken down.

In September 2020, ABD Group was selected by Kokoda Property Group to deliver its $250 million Malvern Collective project in the city’s eastern suburbs.

Kokoda managing director Mark Stevens told The Urban Developer the group had terminated its contract with ABD Group in late October.

“ABD Group originally tendered for the project, about 18 months ago, presenting a history of completed work of similarly-scaled projects,” Stevens said.

“We ascertained their quality and felt that they were a good fit.

“The pandemic has caused significant issues for most builders across Australia, but particularly Victorian builders.

“Experience tells me that there will be more builders out there that are currently in trouble mainly due to the fact that many of them have been in the market for the past 18 months suffering through site limitations and stalled projects while carrying the same overheads.”

Kokoda has already lined up a number of potential builders to take over construction of its 265-apartment development in place of ABD Group.

Kokoda purchased the Malvern site from ex-Toll executive Mark Rowsthorn for $41 million in 2017 and received planning approval from the City of Stonnington in July 2019.

The project, on the corner of Dandenong and Glenferrie roads, is to be built across three stages, starting with a ground floor retail component that includes the existing heritage Angel Tavern and then a 10-level tower and larger 17-storey tower.

Stevens said construction of the retail stage of the Malvern project was originally due to begin in the March quarter and earmarked for completion by the first quarter of 2022 but was delayed by the pandemic.

The search for a new builder will now push back construction commencement by a further eight weeks.

Kokoda expects a new builder to be announced before the end of the year with work to commence in January.

The collapse marks another big construction casualty post-pandemic after Brisbane-based homebuilder Privium Group—known as Impact Homes for 22 years until its rebrand in 2019—went into administration with debts of $28 million last week.

Privium said the impacts of shutdowns, shortages of building materials and labour had placed upward pressure on the builder as the price of residential construction surged.

Over the year, residential construction costs have jumped by 7.1 per cent—their highest annual increase in more than 16 years—while labour costs and material costs have also surged by also up 5.2 per cent and 8 per cent, respectively.

According to the the ABS, timber prices rose 12.2 per cent in the year to September while the price of steel products climbed 23.7 per cent and other materials, such as carpets, lifted 3.9 per cent.