Builders quit unfinished Cronulla project

The local developer's private lender has called in administrators on the Cronulla project in Tonkin Street. Picture: James Brickwood
The local developer's private lender has called in administrators on the Cronulla project in Tonkin Street. Picture: James Brickwood

A half-built apartment project is up for sale in Cronulla, after developer Lainson Holdings' non-bank financier called time on its unpaid loans.

Builders walked off the 25-29 Tonkin Street property after the local developer's unidentified private lender called in administrators on the 28-unit project, six months before the scheduled settlement with buyers.

HLB Mann Judd's Todd Gammel and Barry Taylor were appointed last month to manage "Dingle", a luxury boutique development on the shores of Gunnamatta Bay.

Non-bank lenders are moving into construction lending as the major banks, which have traditionally accounted for 85 per cent of Australia's $270 billion market, reduce their share to an estimated 70 per cent over the next decade. It's giving developers alternative sources of funding that many are embracing.

But the Lainson story shows the risks for the clients of non-bank lenders, who can be more aggressive in taking steps to recover loans - even cutting a project loose before practical completion.

There is growing distress among apartment developers amid slowing sales in a slumped and credit-starved housing market.

Investor mortgage borrowing grew just 1.1 per cent in November, its lowest annual rate on record, Reserve Bank of Australia figures this week showed.

Falling property prices gathered momentum in December to end 2018 down 4.8 per cent across the country, the weakest conditions in a decade.

Other recent local private lender-led receiverships include the 100-unit Royal Plaza property in Woodville Street in Hurstville and the 176-apartment towers at 30-32 Guess Avenue, Wolli Creek.

But unlike Lainson's tower, the Royal Plaza was mostly completed while Wolli Creek had not even commenced when lenders swooped in.

While unfinished properties are not common in Australia, they are often a symptom of a housing crisis and a reminder of how things can turn against over-ambitious developers.

In China, there are more than 60 million empty apartments sitting in eerie ghost towns, a result of a debt-fuelled housing bubble that led to many projects being left unsold or uninhabited.

In the case of Lainson, the group was understood to have disagreements with its current builders. It was not the first time it ran into problems with builders since the project was launched for sale about four years ago.

Lainson also runs Cronulla-Crete and Calypso Holiday Apartments in Coffs Harbour.

Between 2016 and 2017, the developer headed to court over unpaid bills of about $1 million with another builder, Duffy Kennedy.

This leaves the project in limbo as the sunset date - the last date either the developer or buyers can rescind contracts - looms.

The administrator has put the half-built project on the market for sale. Colliers International's Matthew Meynell and Miron Solomons are handling the expressions of interest sale.

It is understood only about half of the 28-apartment project has sold through local selling agent Highland Property Agents.

The company did not respond to calls, and has since removed project advertisements from its website.

The development includes one to three-bedroom apartments as well as penthouses. It will also have two retail units and underground parking.