Grocon hits hard times
Construction giant owes up to $60m
THE Australian construction giant that built the athletes village for the Gold Coast Commonwealth Games has gone into administration.
Grocon is said to owe up to $60 million to 52 companies.
The news follows a rocky few years for the construction firm which faced the heat of many subbies on the Gold Coast during construction of the Parklands site in 2017.
The builder’s Queensland company was issued $27,000 in penalties over its treatment of subbies working on the $650 million project and was banned from building in the state.
It was also blamed for the demise of the largest local subcontractor on the project, Ware Building.
Grocon was also responsible for the construction of The Oracle on Broadbeach and Soul in Surfers Paradise, both of which were finalised by receivers at the time.
The company ended any involvement on the Gold Coast in 2018 when it sold its share in the old Games village, run by Smith Collective, to Abu Dhabi Investment Council.
UBS Asset Managemen and JLL were the other investors following the conversion of 1251 apartments in the former village into rental units.
When asked about the current ownership of the property on Friday, a spokesman told the Bulletin he would not share the name of the owner as he “did not want to make that public at the moment”.
Gold Coast CBRE managing director Mark Witheriff said while Grocon’s demise was significant there would be little to no impact locally.
“It is sad to see an iconic family building company hit hard times,” Mr Witheriff said.
“At any point in time when a group of this size in the construction industry takes a hit it does cause uncertainty but for the Gold Coast there is no direct impact.
“With the number of developments under way they are all moderate in size and scale and therefore we should have confidence it is unlikely similar issues occur.
“This is an isolated incident, not a pandemic-related issue.”
Grocon blamed the collapse on the scuppering of its plans for the Central Barangaroo project in Sydney, dominated by Crown Resorts’ new casino.
Grocon alleges rival Lendlease and the gambling giant reached a secret deal with the NSW government on building heights last year, protecting the rights of Crown tower – now Sydney’s tallest building – to unobstructed views of the harbour.
That killed off Grocon’s plans to build much smaller commercial and residential towers nearby.
Grocon chief executive Daniel Grollo is furious at Infrastructure NSW’s handling of the precinct since the closure of the Barangaroo Development Authority, which he alleges was aware for years that the dispute over the views would scupper Grocon’s proposal.
“But it withheld this information, instead continually confirming the height Grocon could build the commercial and residential towers,” Mr Grollo said.
“For almost three years, I was reassured every time the matter of sightlines was raised with the BDA that Grocon should proceed, and we continued to invest millions and millions of dollars.”
The company says it was forced to vest its development rights in a fire sale to fellow consortium member Aqualand, six years after its began pouring money into the project.
“It is unfortunate that INSW is forcing our hand to place the construction business into administration,” Mr Grollo said.
“While I have spoken before about moving Grocon away from the construction business model to new initiatives such as build to rent, I did not want to call in administrators.”
Grocon is fighting in the NSW Supreme Court for compensation.
“My desire is to pay the creditors in full,” Mr Grollo said.
“I believe we will ultimately win the case against INSW, and when we do so, the creditors will be the first in line to be compensated.”
The company’s Ribbon development in Sydney and Northumberland development in Collingwood, Melbourne will not be included in the administration entities.
Mr Grollo’s grandfather Luigi founded the business in 1954.