Hundreds of Gold Coast and Sydney off-the-plan apartment buyers have been caught out by the collapse of one of the country's biggest private developers, William O'Dwyer's Ralan Group.
Hundreds of Gold Coast and Sydney off-the-plan apartment buyers have been caught out by the collapse of one of the country’s biggest private developers, William O’Dwyer’s Ralan Group.
The developer, whose flagship project is the $1.4 billion Ruby Collection at Surfers Paradise comprising 1600 apartments spread across four towers, owes around $500 million to creditors, including Westpac Bank and Melbourne finance house Wingate.
Administrators Said Jahani, Phil-Campbell Wilson and Graham Killer from Grant Thornton, who were appointed to Ralan and more than 50 of its subsidiaries this week, said the group had a development pipeline of “over 3000 residential units in the construction or pre-sale stage”.
“At this stage, we can reveal that the [Ralan] directors felt the company was in a stressed financial situation and decided that voluntary administration was the best path forward as the companies were either insolvent or likely to become insolvent,” Mr Jahani told The Australian Financial Review.
“We are still conducting our initial investigation – however, there is a range of small to large creditors. The total value of creditors is still to be confirmed but initial indications are around $500 million owed across the group.”
Only the first of the four Ruby towers has been completed, with construction yet to kick-off on the three other towers.
Mr Jahani said people who have purchased completed apartments, which have settled, were unlikely to be impacted. But for others who purchased off-the-plan in Ralan developments, the outlook is less clear.
“We are still investigating options regarding the other developments in the pipeline which are yet to commence but have been pre-sold,” Mr Jahani said.
Also uncertain is the fate of a Ralan development in Arncliffe in Sydney’s southern suburbs, where Sydney’s Richard Crookes Constructions is the builder on the 318-apartment project, which is well underway.
“We are in discussions with the relevant stakeholders about the best way to proceed on this project in order to preserve value,” Mr Jahani said.
Title deeds to the Arncliffe site show mortgages to Wingate and Westpac.
In 2016, Wingate also invested $36 million in the development of the first of the now completed Ruby towers.
“Ralan has chosen to enter into voluntary administration as a result of unsecured borrowing arrangements unrelated to Wingate,” the financier said in a statement to The Australian Financial Review.
“We presently have a number of open debt positions with Ralan, all of which are secured by charges and mortgages over real property. We expect that we will recover all amounts outstanding,” Wingate said.
Ralan was founded 21 years ago by William O’Dwyer and initially focused its efforts on developing hundreds of apartments on Sydney’s North Shore.
“I am confident that the Gold Coast does not present any greater risk than Sydney, in fact I would be more concerned about settlement risk in the southern cities than I would about the Gold Coast right now,” Mr O’Dwyer told The Australian Financial Review in 2015.
Ralan Group is the second major developer to collapse in less than a month as the fallout spreads from the growing reliance on expensive non-bank construction finance amid a bank credit squeeze, a slowdown in apartment sales and growing number of buyers facing valuation shortfalls at settlement.