Lockdowns, interest rate rises and soaring construction costs have been blamed for parts of a Melbourne developer going into liquidation.

Parts of multi-billion dollar developer Caydon, which is behind hundreds of apartments in Melbourne, have gone into liquidation.

Joe Russo, managing director of the prominent Asian-backed developer, said the company had been dealt one difficult market situation after another in the last few years, including prolonged Covid lockdowns.

The latest “confronting” challenge was pricing factors affecting the Australian property and construction industry.

“Since the inception of Caydon we’ve delivered some amazing projects, including over 3000 apartments, hotels and offices, all of which I am immensely proud of,” Mr Russo said in a statement.

“Sadly, over the last few years, Caydon has had to deal with one difficult market situation after another.”

He pointed to Covid disruptions as having caused business uncertainty and severely impacting sales.

“Pressure on construction costs resulting in builder insolvencies and supply chain interruptions, and now the interest rate pressures and negative house price sentiment, has placed additional pressure on our operations,” Mr Russo said.

“It has been extremely difficult to make this decision, but to ensure the best possible outcome for all of our partners and customers, we have had to commence the liquidation of part of our Australian business.”

He said active projects – HOME in Alphington and Due North in Preston – would not be impacted.

The Australian Financial review reported the collapse as the biggest biggest private developer failure since Ralan and Steller.

Perth developer axes $165m apartment project

The partial collapse of Caydon comes less than a week after a Perth developer killed off a $165 million luxury tower, where more than 50 per cent of apartments had been bought off the plan, blaming skyrocketing construction costs and labour shortages.

The high rise development, which was set to start construction in April and include 98 apartments across 38 floors, was going to be built in South Perth by developer Sirona Urban and Singapore-listed property giant Chip Eng Seng.

The apartment tower would have been one of the tallest apartment buildings in Perth, but instead buyers will now have their deposits returned.

Sirona Urban owner Matthew McNeilly said construction costs had risen by 30 per cent in the past 10 months, while a shortage of tradies were also causing problems.

$500m project killed off by Melbourne developer

It was the second major apartment project to fall over in Australia last week.

A Melbourne developer, Central Equity, abandoned plans to build a $500 million apartment tower on the Gold Coast blaming the crisis in the building industry and surging construction costs for making the project unprofitable.

The development was set to kick off this year featuring 486 apartments in a 56-storey tower, which was known as Pacific One, and was due to be built on a beachfront block in Surfers Paradise.

Apartments had been sold from a starting price of $650,000 each, but “industry insiders” had claimed that unit prices would need to rise by 20 per cent to cover increased labour and building costs, Central Equity said.

The developer refused to reveal how many apartments had been sold off-the-plan for the project, but said buyers had been notified that the build had been cancelled and their deposits had been refunded.

Central Equity has been operating for 35 years and has completed 85 developments but this will be the first time a project has not been completed by the developer.

The pile up of failed building companies

It comes as the construction industry has been plunged into crisis with a spate of company collapses.

Earlier this year, two major Australian construction companies, Gold Coast-based Condev and industry giant Probuild, went into liquidation.

The grim list has continued to grow as a number of other high profile companies also collapsed, including Inside Out Construction, Dyldam Developments, Home Innovation Builders, ABG Group, New Sensation Homes, Next, Pindan, ABD Group and Pivotal Homes.

Other joined the list too including Solido Builders, Waterford Homes, Affordable Modular Homes and Statement Builders.

Then two Victorian building companies were further casualties of the crisis having gone into liquidation at the end of June, with one homeowner having forked out $300,000 for a now half-built house.

Hotondo Homes Horsham, which was a franchisee of a national construction firm, collapsed last week affecting 11 homeowners with $1.2 million in outstanding debt.

It is the second Hotondo Homes franchisee to go under this year, with its Hobart branch collapsing in January owing $1.3 million to creditors, according to a report from liquidator Revive Financial.

Meanwhile, a Sydney family face never being able to build their dream home after their builder Jada Group collapsed in March owing $2.4 million and the cost of their home’s construction jumped to $1.9 million, a whopping $800,000 more than the original quote.

Snowdon Developments was ordered into liquidation by the Supreme Court with 52 staff members, 550 homes and more than 250 creditors owed just under $18 million, although it was partially bought out less than 24 hours after going bust.

Dozens of homeowners and hundreds of tradies were left reeling after a Victorian building firm called Langford Jones Homes went into liquidation on July 4 owing $14.2 million to 300 creditors.

News.com.au also raised questions about NSW builder Willoughby Homes, which is under investigation by the government after builds stalled and debts blew out to 90 days.

There are between 10,000 to 12,000 residential building companies in Australia undertaking new homes or large renovation projects, a figure estimated by the Association of Professional Builders.

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