The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
TUD CELEBRATES QLD STATE OF ORIGIN VICTORY 2-FOR-1 URBANITY TICKET DEAL - BUY TODAY
CELEBRATING QLD STATE OF ORIGIN VICTORY 2-FOR-1 URBANITY TICKET DEAL
GET DISCOUNTDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
16
print
Print
ResidentialDinah Lewis BoucherMon 03 Jun 19

Developers Seek Non Bank Finance Amid Lower Presales

1ea72c8e-3cc6-4aa3-a645-441c959615bb

Tighter finance conditions and less investor activity in the market continues to challenge developers as the retreat of major banks from commercial real estate lending gives way to a rise in demand for alternative lending.

A growing number of development projects are being backed by non-bank lenders as developers and investors alike struggle to secure finance through mainstream banks.

Non-finance group Chifley Securities reported a 16 per cent rise this financial year in property developers seeking financial help as pre-sales and sales in their projects slow.

Chifley Securities principal Dominic Lambrinos says most of the loans are for developments located in the outer suburbs of the Eastern Seaboard’s capital cities.

“Being 40 kilometres from Sydney’s CBD, 30 km from Melbourne and 20 km from Brisbane,” Lambrinos said.

“The developments generally average around $26 million and are being challenged as purchasers, many of whom are young couples and families, simply can not arrange finance with their lenders or are spooked by the market slowdown.”

Related: Developers Offer ‘Free Mortgage’ Incentives

In 2016 APRA increased the level of capital the major banks needed to hold as a "buffer" against their loans, prompting lenders to rethink the composition of their loan books.

Many banks responded by tightening finance for residential developers through measures including stricter pre-sales requirements and lower maximum loan-to-value ratios.

While some banks are asking for a 100 per cent debt cover or more on pre-sales as one of their conditions precedent, private lenders will usually lend with lower pre-sales levels but at a higher cost of finance.

Privately-owned Chifley says it lifted its lending to developers and landowners from $1.8 billion to $2 billion during the 2017-2018 financial year, with a large proportion of loans going to development projects now under way.

Developer Trenerry Property Group kicked off construction on its $345 million mixed-use project in Melbourne in March this year after announcing it had secured a major private funding deal with real estate investment manager Qualitas.

Qualitas provided $250 million in senior debt to fund construction of the five-tower project in Melbourne's West End.

ResidentialAustraliaFinanceReal EstateSector
AUTHOR
Dinah Lewis Boucher
More articles by this author
ADVERTISEMENT
TOP STORIES
Freecity Rouse Hill triple towers 2 Tempus Street
Exclusive

Freecity Takes Covers Off $330m Triple Towers in Sydney’s North-West

Leon Della Bosca
5 Min
Parallel Workshops Stockdale Housing PBSA project
Exclusive

Suburban Success Story Turns PBSA Thinking on its Head

Leon Della Bosca
7 Min
Exclusive

Interstate Developers Find Lots to Love in ‘Progressive, Affordable’ SA

Taryn Paris
5 Min
Bates Smart Richmond Sportslink HERO
Exclusive

BtR Focus Drives Bates Smart’s Richmond Sportslink Concept

Leon Della Bosca
6 Min
Exclusive

Carparking Correlation: How Parking Fees Provide Office Sector Health Check

Taryn Paris
6 Min
View All >
Bridgewater Gagebrook Brighton Derwent River from Granton
Planning

Scheme to Unlock 362 Lots in Tasmania Revealed

Leon Della Bosca
Freecity Rouse Hill triple towers 2 Tempus Street
Exclusive

Freecity Takes Covers Off $330m Triple Towers in Sydney’s North-West

Leon Della Bosca
Genton Architects' rendering of the East Village Sunbury project by Birchmore and IDA on Lancefield Road in Sunbury, Victoria.
Retail

Retail Centre Moves Ahead as Sunbury Prepares for Growth

Marisa Wikramanayake
The Woolworth-anchored neighbourhood centre will comprise five buildings at Kingsfield, north-west of Melbourne...
LATEST
Bridgewater Gagebrook Brighton Derwent River from Granton
Planning

Scheme to Unlock 362 Lots in Tasmania Revealed

Leon Della Bosca
3 Min
Freecity Rouse Hill triple towers 2 Tempus Street
Exclusive

Freecity Takes Covers Off $330m Triple Towers in Sydney’s North-West

Leon Della Bosca
5 Min
Genton Architects' rendering of the East Village Sunbury project by Birchmore and IDA on Lancefield Road in Sunbury, Victoria.
Retail

Retail Centre Moves Ahead as Sunbury Prepares for Growth

Marisa Wikramanayake
2 Min
Development

Brisbane Needs Big, Hairy, Audacious Goals and a Plan: Peter Edwards

Taryn Paris
3 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/developers-seek-non-bank-finance-amid-lower-pre-sales