9 hours ago
Arrow Building Group collapses into voluntary administration - leaving projects in the lurch
A Melbourne building company has gone into voluntary administration, leaving a dozen projects across the city in doubt.
Arrow Building Group appointed an administrator, Hamilton Murphy's Stephen Dixon on April 22.
The company lists several projects as 'under construction' on its website, including a development of eight two-bedroom homes in Lilydale, eastern Melbourne.
'From forever homes to multi residential developments for investors, our skilled team work on a vast array of different projects,' Arrow Building Group's website says.
Photos showed the underslabs and structural steel for the homes had already been installed.
Other projects included homes in Heathmont, Dandenong and Windsor.
A staff member declined to comment when reached by phone on Tuesday.
In the financial year to March 2025, more than 2,600 Aussie construction companies became insolvent for the first time, up 23 per cent from the year prior.
Daily Mail Australia has contacted Hamilton Murphy for comment.
What's going wrong in the Australian construction industry?
Several well-known companies in the industry have collapsed, including Clough Group, Probuild, and Porter Davis Homes.
'Australia's homebuilding industry is characterised by low-profit margins and fixed-price contracts, meaning that there is little headroom or mechanism for builders to absorb pressures such as rises in material costs and labour shortages,' explained Bradley Hastings, a building expert from the UNSW Business School.
'This means that many homebuilders have been operating at negative cashflows, where suppliers don't get paid, and projects are left unfinished.'
He said that when a residential homebuilder goes bust, consumers become unsecured creditors and are at the bottom of the food chain after a lengthy insolvency process.
'The fallout does not stop at consumers, subcontractors also join consumers on the unsecured creditor's lists.
'Often, small or family-run businesses become unsecured creditors needing to cover the cost of their materials and staff if they want to continue to trade.'
Mr Hastings said that unlike other large investments, such as superannuation, the construction sector has little regulation regarding how consumer funds are utilised and protected.
'When a homeowner places a deposit with a builder, this money can be spent for any purpose.
'In some cases, there have been stories of builders on luxurious holidays at the same time as homes go unfinished.
'More often, given the cash flow pressures across the industry, consumer deposits from one project are used to complete prior commitments.'
He said a solution could be protecting consumer deposits with 'project accounts where consumer funds reside until they are drawn down by builders and subcontractors and the work is completed to standard.
'In the event that the builder goes bust, this money remains in place to pay subcontractors and continue the build. A side benefit of this approach is that it may improve the robustness of the construction industry, providing homebuilders with a motive to ensure that each project stands on sound financial footing.'
