Under one roof: Developers with their own construction companies are on the rise

Long delays prevent buyers from purchasing new apartments. These developers are combating the problem.

The rise of construction developers has emerged as a solution to current market pressures, as developers realize that the challenges facing the construction industry are much more than temporary roadblocks.

A growing number of residential developers have found a solution by setting up their own construction company to complete projects faster and within budget. Edge Visionary Living, Pikos Group, Mosaic Property Group, Highlife Property Group and Marquee Property Developer are among Australian companies operating their own in-house construction businesses.

The decision to take greater control over the construction of their developments comes after ongoing challenges faced by the construction industry. Labor shortages and a significant increase in the cost of construction materials have pushed construction times out in recent years, leading industry experts to call for coordinated policy efforts to address the backlog.

Steps have been taken to streamline building approvals and reduce regulatory burden, but a large part of the problem is the fact that the time it takes to build a residential home in Australia has inflated over the past decade, with significantly longer wait times as the average construction time increases.

Subcontractor performance remains a critical issue for developers, with research showing 82% of developers reporting financial losses due to subcontractor insolvency in FY24.

Over the past decade, construction times in the apartment and detached housing market have lengthened, causing the costs of building a house to rise even further. Image: Getty

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The 2024 BDO Australia Construction Survey Report shows that more than half of respondents employ more than 1,000 subcontractors and report that increased competition and supply chain disruptions have significantly impacted profitability. While 55% reported minor impacts, 27% suffered significant financial losses due to construction delays.

Construction activity is well behind the target of building 1.2 million homes in the five years to 2029, according to PropTrack’s executive manager of economics, Angus Moore.

Recent data from the Australian Bureau of Statistics shows little sign of change, with about 43,000 to 44,000 new homes being built per quarter.

According to Mr Moore: “That pace is around 25% to 30% lower than the pace we need to meet the government’s target of 1.2 million homes over five years.”

The edge

But developers are fighting back. Gavin Hawkins, executive director of Edge Visionary Living, has noted that a series of builder bankruptcies and rising costs have been tough on developers in recent years.

In response, Edge Construction was founded in 2023 as the in-house construction arm of Edge Visionary Living. Founded to provide greater quality control, transparency, consistency and accountability, the company operates exclusively on Edge Visionary Living projects and employs more than 40 people.

One of Edge Construction’s most recent projects completed the Edge Broadway on the Bay project in Crawley, Western Australia, with 21 apartments completed in October this year.

According to the developer, the in-house construction capability has been a game changer in eliminating the disconnect that can occur when working with external builders. Having one team with shared priorities and responsibility means you can respond quickly to site conditions, proactively adapt programs and maintain momentum on site, even during periods of industry-wide pressure.

“By embedding our construction department within the broader Edge Visionary Living team, we oversee the construction program from day one. Design, development and construction work together, allowing us to anticipate challenges early, streamline decisions and maintain tighter control over sequencing and procurement,” said Mr Hawkins.

Edge Construction was founded in 2023 as the in-house construction arm of Edge Visionary Living. Image: Edge Construction.

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It cemented the deal with buyers. “Buyers recognize that this model eliminates many of the risks associated with third-party builders. Instead of relying on third parties for competing priorities, they see a single, unified team with shared responsibility for quality, timelines and results. This continuity results in clearer communication, more predictable delivery and a higher level of trust,” said Mr. Hawkins.

At a height

The construction branch of Highlife Property Group grew organically, says director James George, who was previously a carpenter and builder for many years. “Bringing construction in-house gives us a level of quality control and coordination that is difficult to achieve otherwise,” Mr. George said.

The company’s latest project is Blonde Bilinga, consisting of 19 beachfront apartments on the Gold Coast. Construction began in June this year and the project is on track for completion in mid-2027.

“Because we manage everything internally, we understand true costs and can keep budgets accurate and controllable. And with fewer interruptions and full visibility, we can run tighter programs and keep projects moving even when problems arise,” he said.

An artist’s impression of Blonde Bilinga, which is under construction on the Gold Coast. Image: Highlife Property Group.

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Housing shortage

While current data suggests that the government’s ambitious target of delivering over a million new homes by 2029 is unlikely to be met, any increase in efficiency in delivering those homes is extremely welcome.

If developers can keep schedules tight and optimize construction, there is the potential to control cost blowouts that have contributed to rising prices for new construction on the consumer side.

HIA chief economist highlighted that recent figures for October show a decline in new home sales across Australia and stressed that cost savings are essential to support housing construction.

“Reducing the cost of bringing new lots to market will be key to sustainably increasing new home sales and housing Australia’s existing and growing population,” he said.

Would you like to know more about building houses in Australia? Check out our special New Homes section.