Perth-based developer enters administration, Master Builders says smaller developers hit by decline in smaller projects

Birchwood Consolidated, the developer of the new 26-level Equus development in the Perth central business district, has entered administration, as Master Builders Western Australia notes that smaller builders are being hit by reduced demand for small projects.

The Perth-based company appointed a receiver and manager last week. KordaMentha partner Craig Shepard, who has worked on Lincraft, Timbercorp and Enviroinvest, got the job.

Shepard was in Perth this morning and could not be contacted before deadline. He is quoted in the Australian Financial Review saying the project was high-quality, but marred by higher costs and subdued demand.

The development, which comprises apartments, commercial suites and a ground-floor shopping arcade, was completed earlier this year.

It has called itself “Perth’s newest and most exciting development” and an “overwhelming success that has exceeded the expectations of all involved”.

Michael McLean, director at Master Builders Western Australia, says he was aware that the Equus development had some problems, including unions’ issues with foreign labour.

But he stressed that he was not aware of the reason for Birchwood’s collapse, such as a lack of pre-sales, project delays or price increases.

McLean adds it’s been a difficult year for the building industry, with small- and medium-sized businesses and projects hit harder than their larger counterparts. Financing is also a problem for small operators, McLean says.

“The number of small to medium jobs have reduced,” McLean told SmartCompany this morning. “The tender lists been more competitive and it’s more difficult to win work.”

But McLean predicted 2012 would be an improvement on this year, citing a number of projects coming on-stream and the healthy civil engineering sector.

“The industry is going okay; the turnover of work being carried out by the industry is reasonable in an historical sense.”

CBRE this morning said that the WA residential market “remains in the midst of a slowdown punctuated by falling levels of buyer activity”.

CBRE Global Research and Consulting Manager Sam Reilly said owner-occupiers and investors were held back by concern on the global economic outlook.