The CBD Group

Jul 7, 2022

Key points A property developer has blamed rent relief rules and the pandemic for the collapse of six of his companies. CBD Development director Guo Jing Chen said during Melbourne’s lockdowns tenants vacated his properties and agents were unable to re-let them. Chen is the first major developer to blame government actions for his group’s collapse. Advertisement A large private developer has blamed government rent relief measures and the COVID-19 pandemic for the collapse of six of his companies that rely on rental income from commercial and residential tenants. CBD Development director Guo Jing Chen, who is behind an almost complete $400 million tower complex in Box Hill that will be unaffected by the administration, said that during Melbourne’s lockdowns tenants vacated his properties and agents were unable to re-let them. An artist’s impression of CBD Group’s planned mixed-use project in Box Hill. Credit: “These companies were heavily impacted during the COVID-19 pandemic and [by] government policy, including rent relief measures for tenants,” Chen said. In a bid to limit the economic fallout from COVID-19, governments across the country banned landlords from evicting tenants suffering financial stress, instead requiring them to give rent relief and defer lease payments. “Revenues were heavily impacted and financiers called in receivers to two of the entities in mid-2021. This prohibited the payment of tax debts. We have worked transparently with the Australian Tax Office for many months but have been unable to satisfy their requests,” he said. The escalating number of property-related collapses in Victoria and a slower than expected recovery from the pandemic prompted the opposition’s spokesman for the CBD’s recovery, David Southwick, on Thursday to say the state and city has “lost its mojo”. Minister for Industry Support and Recovery, Ben Carroll, said the nighttime and weekend economies were performing well in the CBD. “We’ve got more work to do in terms of the daytime economy, and we’ll have some further announcements on that in the future,” Carroll said Thursday. The city’s office towers were only 48 per cent full of workers in May, according to the most recently published survey of Property Council members. Business owners have cited the lack of workers returning to the office as a major barrier to recovery. Advertisement The companies tipped into administration own or manage more than 90 properties worth $65 million. They include 40 apartments in the group’s Sydney Road project in Brunswick, another 16 in its Banque 88 high-rise in Southbank, a supermarket and two offices in a Chadstone development and similar properties in The Bentleigh Centre it developed in Melbourne’s south-east. These companies were heavily impacted during the COVID-19 pandemic and [by] government policy including rent relief measures for tenants. CBD Development director Guo Jing Chen The latest body blow to the property sector follows the collapse last week of two home builders that left hundreds of homeowners in limbo. Family-owned Langford Jones Homes went into liquidation leaving 65 homes unfinished, owing 250 creditors more than $10 million, and another Victorian builder, Snowdon Developments, is in voluntary administration with 550 unfinished homes and 262 creditors owed $17.8 million. Ian Collins, who has run the Evelyn Faye Nutrition store on Bourke Street since 1995, said the city’s recovery was taking longer than it needed to. “The worst part is the lack of office workers in the city,” Collins said, speaking alongside Southwick and Opposition Leader Matthew Guy on Thursday. “Daytime shopping is still very low.” In the public sector, Victorian public servants have been told to work in the office three days a week, but Southwick speculated there was no oversight or enforcement of that directive. “[Premier] Daniel Andrews has got his head in the sand, and as a result, the businesses are suffering,” Southwick said. Full-time staff at the Australian Tax Office are expected to go to the office three days a week, while many Australia Post staff have arranged a hybrid model. Victoria Police expects employees to go to the office five days “unless there is an agreed flexible working arrangement in place,” he said. Chen is the first major developer to blame government actions for his group’s collapse. Loading His troubles are the tip of a broader stress across the industry, which has put pressure on businesses as large as Metricon Homes and top-tier construction firm Probuild , which went into administration in February. The CBD Group’s companies are in the hands of Cor Cordis administrators, Barry Wight and Sam Kaso. The developer’s most recent project, a $400 million soaring glass tower in Box Hill, in which many of the 517 residences have already been sold, is being built on the corner of Whitehorse and Wellington roads. “The appointments were expected to have no impact on the development or its intended completion later next year. This project is fully funded, on track and expected to complete on time,” Chen said. “Our construction and fit-out program [is] on schedule. Tower 1 and Tower 2 will be completed on-time by the second half of 2023,” he said. The collapsed companies include Chenli Pty Ltd, Chen Corporate Holdings Pty Ltd, C & K Group Investments Pty Ltd, CBD Development Group Pty Ltd, CBD Development Holdings Pty Ltd and The Bentleigh Centre Pty Ltd. The City of Melbourne said about 90 per cent of its staff are working at the office at some point during the week. “We expect our staff to be back working from the office, and that’s exactly what we’re seeing - it’s wonderful to see people coming together to collaborate,” the council’s acting chief executive Alison Leighton said. Last week, pedestrian counters near Town Hall found weekday activity was 86.2 per cent of pre-pandemic levels. But pedestrian activity near the state government offices was about 60 per cent of normal.