Bathla Group administrators Teneo are expected to announce the closure of the property development and construction business on Friday after failing to rescue it from the threat of liquidation.

The failure of Bathla became apparent at the beginning of September when a $3.4 billion debt to credit firms was exposed by the Group’s voluntary administration, leaving the construction of 2500 homes in limbo.

Teneo stood down 200 of Bathla’s 350 staff in an effort to conserve funds whilst stringing together deals with investors Ray White Capital, Centuria, and Asian investment house PAG.

The $4.7 million gathered from these lenders has not been enough to continue operations as Teneo is expected to stand down the remaining 150 staff and shut down construction sites on Friday.

Following their voluntary administration, further investigation into Bathla’s financial past revealed the property developer had been blacklisted by many big banks, including ING, for almost 20 years.

The Group had been barred from borrowing from mainstream lenders following attempts to sign refugees up to mortgages they could not afford.

This controversy did not stop Bathla from gaining a successful reputation as a low-cost developer as they focused on a business model of executing high volumes of low cost construction.

However, the NSW building regulator Building Commission NSW had conducted a series of inspections across Bathla sites in recent months, finding serious defects in one of the developer’s key projects which they were ordered to resolve.

Whilst the construction of 2500 apartments has confirmed to be halted, a further 14,000 properties in the Group’s wider development pipeline will be affected.

Work on 45 construction sites operating under the Bathla name is expected to be called off on Friday as Teneo ceases operations.

A majority of Bathla’s ongoing projects are based in Western Sydney and it is approximated that as many as 1000 deposits for incomplete homes were being held by the company at the time of its voluntary administration.

The liquidation of the property giant comes at a dire time in the housing crisis, Australia rapidly falling behind in meeting the Albanese government’s goal of executing the builds of 1.2 million homes by 2029.

Official forecasts released by the National Housing Supply and Affordability Council now track these targets to be running at least a year behind nationally, while NSW’s goals are the most delayed at three years behind schedule.

These targets are growing harder to reach as the construction industry becomes more strained with higher costs, lower profit margins and greater risks associated with interest rate rises and spooked investors.

Bathla adds to the growing list of builder insolvencies since COVID, when rapidly rising construction costs forced businesses to absorb the losses of fixed-price contracts in a non-sustainable nature.

The National Housing Supply and Affordability Council confirmed in August that construction costs are now 51 per cent greater than before COVID.

In addition to the material-cost crisis, ongoing trade shortages have driven up the cost of wages as home builders are forced to compete with data centres builders for the limited pool of tradespeople.

These factors create a perfect storm of risk that is deterring investors from the housing market, despite it being in increasingly high demand.