Experience
Construction & Property
The construction industry is often the budgie in the coal mine for the broader economy due to the longer-term nature of construction and development projects.
Different service segments within the construction industry are then impacted at different times depending on where they sit on the construction path.
In the past 12 months we have started to see a number of failures across the construction industry including Built whose parent withdrew from the Australian market. We are likely to see further reductions in capacity as global construction giants focus their balance sheet capacity on more profitable markets with greater margins.
Key Challenges
- Rising crude oil and electricity prices have negatively affected both construction inputs and required energy supplies. As a result, firms that have struggled with rising expenses have collapsed, with flow-on effects hindering many related upstream and downstream industries such as construction suppliers and real estate agents.
- Building construction industries are forecast to continue declining over the short-term. revenue in the building subdivision is forecast to decline sharply over the short-term due to the absence of stimulus from the HomeBuilder subsidy, and despite mortgage interest rates remaining low by historical standards.
- Profitability is forecast to strengthen over the next 5 years, supported by modest improvements in demand from downstream building and infrastructure markets and a return to favourable conditions in many special construction trades.
- Employment and participation are forecast to grow steadily over the next 5 years, although some smaller building firms will likely exit.
- Revenue for the Heavy and Civil Engineering Construction segment is also forecast to strengthen over the next 5 years, due to continued record investment in transport infrastructure projects by State and Federal governments which is also putting pressure on demand and pricing in labour markets.
Our experience
Speed is imperative in dealing with restructuring and insolvency in the construction sector. Due to the shortage of experienced builders and labour shortages we have seen developers leaning in to support struggling operators.
This means that project by project profitability needs to be determined quickly, and then where funding is required negotiating this with the developer or finding an alternative builder to minimise damages claims.
Olvera has completed a number of restructuring and insolvency assignments across the construction sector over the past 12 months while maintain trading operations on site.
Case Studies
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