24 Sep

Market Commentary

Market CommentaryThere is currently a resurgence of building activity in the regions and in particular in two of our main centres, Auckland and Christchurch, where there is large project work underway. Even with this positive activity in the building market, the focus seems to be on the collapse of Mainzeal Property & Construction Ltd and Starplus Homes, two of our biggest construction companies.

How is it that these two companies failed at a time when the building industry is supposedly on the up-and-up?

While we are coming out of one of the biggest recessions in recent history and there is a definite increase in building activity, this is a very precarious time for construction companies. The downfall of these two major firms is a good illustration of this. More than ever, Credit Providers should be more vigilant at monitoring the indicators for building company failure. This will help ensure potential debt exposure risk is minimised.

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