The company developing a $450 million mega-housing project at Orewa has gone into receivership.
The construction project is the largest and most advanced in New Zealand to go under.
Kensington Park Properties had planned to build 750 houses on the former Puriri Park camping ground in Orewa. Only about 60 have been built.
Patrick Fontein of Kensington Properties, the developer's parent company, admitted a few weeks ago that problems existed, and blamed the state of the housing market.
Most of the site is a construction zone, and its future is now uncertain.
Residents' expectations of lakes, a gymnasium, extensive landscaping, a swimming pool and other common-area facilities look to be pipe dreams.
Rodney District Council mayor Penny Webster said the situation was "disappointing' for the seaside community.
"We're looking at what we can do but there's not a lot we can do. We're hoping it will trade out," Mrs Webster said.
She said many local sub-contractors were now out of work.
"It's a horrible bi-product of the markets," Mrs Webster said.
Other partly-built projects that have run into trouble are less advanced than Orewa.
Only ground works have been completed at the $200 million Soho Square in Ponsonby, and little work has been done on the $2 billion Five Mile venture in Queenstown.
About 30,000 people work in the construction industry, which has been an economic growth area and a drawcard for migrants.
But lack of confidence in the economy, lack of money and little demand have led to new housing projects being shelved.
Statistics NZ figures showed more than 26,000 houses were put up in 2004, but in the year to July, that dropped to 20,000 houses.
Builders, desperate for work, are resorting to delivering letterbox fliers.
Some large firms are laying off staff and subcontractors say the bulk of their work now is in renovations.
"If you can't sell your house and you have to stay there, you'd better do it up," said one electrician yesterday.
Mr Fontein said last month that all "stakeholders" were working to ensure the Orewa project succeeded.
But subcontractors complained of not being paid.
Money was borrowed from BNZ and Fidelity to finance the ambitious housing project.
Many people agreed to pay deposits for homes, but their exposure is limited because they agreed only to a deposit bond scheme, meaning they paid only a small amount of money.
They were to pay more once the terms of their contracts were settled.
The company in receivership is owned by several parties, including Mr Fontein's Kensington Properties, which has a quarter, Dunedin's Titmotu Investments, Tesla Securities owned by Nicholas Topp and Wendy Norwood of Devonport, and Allee Holdings, associated with car dealer Allan Clarke, who formerly owned the camping ground where the estate was being built.
The first report from receivers Brendon Gibson and Grant Graham at KordaMentha is due on November 23.