The Hadlow apartments by Scarbro Construction. The project was so close to completion when liquidation was declared. Photo / Alex Burton
The Hadlow apartments by Scarbro Construction. The project was so close to completion when liquidation was declared. Photo / Alex Burton
A pioneer of New Zealand’s apartment sector has been caught up in this year’s biggest construction company liquidation, leaving people who bought some of the 100-plus Auckland units wondering when their new homes will be finished.
Scarbro Construction’s biggest job when it failed this month was for a Conrad Propertiesentity developing an almost-finished 124-residence The Hadlow, 406-428 Great North Rd above the Northwestern Motorway between Commercial Rd and the Grey Lynn Library.
Conrad called it “Grey Lynn’s newest urban village” and Scarbro was building the relatively low-rise typology - a big contrast to previous inner-city Conrad blocks like its giant Queens Park Residences at 369 Queen St, The Vincent on Vincent St, the towering Park Residences, 35 Albert St and Volt Apartments, 430 Queen St.
Jamie Hutchens, a Conrad director, said said all The Hadlow’s residences were pre-sold, deposits paid.
“We anticipate a small delay of a further six to eight weeks of completing the project. Purchasers will be advised shortly. We have needed to clarify the correct timeframes, details and processes with the liquidators in order to give our purchasers a clarified position,” Hutchens said.
Conrad was working with the liquidators and anticipated work would re-start there soon.
“From what we currently know, we estimate the project being completed now by end of July. The construction value of the project value is around $34m and is currently around 93 per cent complete,” he said.
The Hadlow’s completion was only about two months off when Scarbro failed. One real estate agent who listed a place there saying he’d been told June. But then the builder shocked the sector when its chiefs declared insolvency.
Leuschke Group designed the complex with 112 residences, 12 apartments and seven retail tenancies. Large places with private courtyards were for sale from $985,000.
Buyers were asked to secure a place with only $1000 “down and nothing to pay till settlement around Q 3, 2022″. The project is running well behind time.
Foreigners are allowed buy: advertising said there had been an exemption granted for international buyers, who must pay $2000 upfront.
Advertising promoted the “upmarket community-based eco-living environment, intertwined with nature and a friendly community, only an easy 3km commute from the Auckland CBD”.
Agents and a financier who were involved in The Hadlow said they had heard nothing so far from Conrad of the project’s future and were uncertain what to tell buyers.
On April 6, directors Garry Scarborough and Peter Davis appointed liquidators Andrew Grenfell and Conor McElhinney of McGrathNicol to three Scarbro companies.
The liquidators said the business couldn’t carry on.
Volt Apartments, 430 Queen St were built by Conrad Properties.
“The directors have advised that despite four of the companies’ five current projects being close to completion, the deferral of new upcoming projects together with the ongoing impacts of Covid associated disruptions, construction price increases, labour shortages and finally the adverse weather events over recent months, have together contributed to the companies’ inability to continue to trade,” McGrathNicol’s statement said.
Today, the first liquidators’ report is due out, possibly with a large projected deficit, naming secured and unsecured creditors, giving more reasons for the failure and possibly saying who’s owed what.
The Hadlow apartments were almost complete. Photo / Supplied
Conrad has built more than 4000 apartments, its founder Robert Holden a pioneer in the sector for his considerable collection of residential towers in the CBD around the Hobson St/Nelson St areas.
Conrad says the business developing The Hadlow is Wimbledon Trustee, part of the Conrad Properties group of companies. Property records also show Wimbledon Trustee owns the big 9135sq m site, nearly a hectare of the city suburb.
The Hadlow apartments at 406-428 Great North Rd above the Northwestern Motorway. Photo / Alex Burton
A mortgage was registered over the title to BNZ in early 2021.
“Established in 1994, Conrad has completed in excess of 4200 residences and boutique commercial spaces. Together the Conrad Properties group of companies are New Zealand’s largest developers of residential apartments,” the company says on The Hadlow’s website.
Conrad is one of this country’s most successful developers, having so much experience in the sector and with such a long track record.
Meanwhile, construction leaders are scratching their heads about why the Scarbro liquidation was declared.
“They were just so close with four out of the five projects about to complete. Why would they roll over like this?” asked one industry boss.
Had work been under-priced via fixed contracts or were claims made against the businesses which made continuing impossible, he asked. Roofs were on most of the residences they were building, so the structures appeared to be watertight, he noticed.
Although Auckland’s floods occurred in January and Cyclone Gabrielle hit in February, most new Scarbro buildings appeared to be in a state of near-completion where they could withstand such unforeseen events, he said.
However, he noted that the liquidators cited loss of future work as a contributing factor. A stretched economy, high inflation and rising interest rates meant a number of planned building projects were shelved so contractors were losing forward work that they had hoped for.
Scarbro’s five live sites were:
1. Apartments for Kāinga Ora at Glenfield;
2. Apartments for Kāinga Ora, Cadness St, Northcote;
3. Fifteen luxury new Balinese-style villas, Matakana Rd, Matakana;
4. Retail construction in Mt Wellington;
5. The Hadlow, 406 Great North Rd, Grey Lynn for Conrad Properties’ Wimbledon Trustee.
Other contractors said they were looking at finishing some of this.
They are worried about subcontractors working on those sites until liquidation froze them and gates were locked. A new contractor taking over would enable sub-trades to return to finish and money to continue flowing.
That would also mean that clients like Kāinga Ora and Conrad’s Wimbledon would get their new homes completed.
