Things never change in the Gold Coast. The sun is always shining, the beaches are always perfect – and the entrepreneurs always get hammered in a downturn.
Gold Coast property developer Craig Gore is the latest to strike trouble. Listed property and finance company City Pacific has put four of Gore’s companies in receivership, claiming it is owed around $200 million.
Gore has countered with legal action and a $300 million damages claim, but the battle is taking its toll – he has admitted that he doesn’t have much of his $180 million fortune left.
There has been a long line of Gold Coast entrepreneurs in trouble in the last 18 months, including Michael King and Philip Adams from collapsed financial services group MFS, former Billabong chief Matthew Perrin, property developer Jim Raptis and childcare king Eddy Groves.
So why does the Gold Coast get hit so hard when the economy strikes tough times, as it did in the late 1980s and the early 2000s? Are Gold Coast entrepreneurs simply too aggressive or are there specific issues that make the region susceptible to downturns?
A bit of both. Because the Gold Coast remains a relatively young and fast-growing region, property and property finance have always been the main focuses for Gold Coast entrepreneurs. The property game requires high levels of debt, which means the sector always struggles in a recession and spectacular collapses are almost guaranteed.
But clearly some Gold Coast entrepreneurs appear to be prone to pushing things that little bit too far – betting too big with too much debt on projects and investments that are marginal in boom times and deadly in a downturn.
As Gore has said himself, some entrepreneurs “tend to have enough money to own a Commodore, and we drive a Porsche”.
When I worked in Queensland in 2004-05 for BRW magazine, the Gold Coast was awash with money thanks the booming state economy. The region’s captains of industry – including some of those who now find their empires in disarray – claimed the city’s boom-and-bust past was behind it.
But once again, too much of the city’s apparent wealth has been shown to be a debt-fuelled dream.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
