TierONE Capital Stays Focused in Time of Change

Sea-changers, tree-changers and a global pandemic have squarely shifted the focus away from Australia’s CBDs for development and investment opportunities.

Non-bank lender TierONE Capital has a finger on the pulse and has the statistics to back up their belief that the time is right to take a wider view of possible opportunities.

For the past decade Australian internal migration figures have shown people moving away from capital cities to regional areas.

Covid-19 has amplified this migration to the regions with a record 11,247 people leaving in the September 2020 quarter, according to ABS data.

“The drive to regional areas is backed by more affordable housing options; the lure of living in less densely populated areas; and the structural shift from the office to more flexible working arrangements,” TierONE Capital head of investment services Chris Broad said.

“Flexible working in particular has meant regional areas within a commutable distance of a capital city have seen large influxes as people are still able to commute to the office once or twice a week.”

This has been particularly prevalent in both NSW and Victoria.

According to CoreLogic in NSW, 7782 Sydneysiders left in the September 2020 quarter while 7445 people left Melbourne.

On the other hand, regional areas are experiencing fewer residents leaving, leading to increased pressure on housing prices as demand markedly outstrips supply.

“Heightened demand has resulted in regional property prices rising at faster rates than capital cities,” Broad said.

CoreLogic data showed that as at 31 January 2021 the average regional home prices had risen 7.9 per cent during the past 12 months compared to just 1.7 per cent in capital cities. We are now only just beginning to see many of the capital cities regain higher growth rates than the regional areas of their respective states.

But, in a world with less certainty than before, will this trend continue?

As the pandemic eases and people return to the office, it can be argued the migration away from the cities will reverse.

However, as transport and infrastructure improves in regional areas, it’s possible cities within commutable distances to the capitals are likely to see demand continue long term.

Combined with the fact that many people will continue with flexible working arrangements, meaning commuting in one or two days a week is possible.

And while demand may fall off as affordability of regional areas increases, until prices in capital cities decrease, people will remain priced out of the market.” TierONE Capital chairman Greg Paramor said.

What this means for developers and investors is that they’re looking further afield for opportunities.

“The migration away from capital cities has created a lack of supply of available land in regional areas,” Paramor said.

If this trend is to be long-term, the supply issues must be solved to diminish upward price pressures. State and local governments can, and should, play an active role in releasing land for development and streamlining processes for construction of residential homes.

Currently, supply is lagging behind the unprecedented demand for regional property.

As supply of available land for development increases, regional areas should see a boom in development opportunities.

Paramor said TierONE Capital’s focus on the needs of its investors and borrowers meant it looked at opportunities such as this holistically.

“Looking after both sides of the equation is vital to achieving the right outcome, not just in the short term but, most importantly, in the long term as well,” he said.

TierONE Capital’s team includes industry experts specialising in the commercial and property finance landscape, who are across emerging and predicted trends and growth areas. This places them in the perfect position to work with, and advise, clients about areas of opportunity.

The group’s loan clients include property developers looking to finance construction and land-bank projects, property owners in the commercial sector, and commercial clients looking to refinance or consolidate their portfolio.

Paramor says “our expertise, combined with our offering and use of quality products, plus transparent and clear communications throughout the process and life of the project, means TierONE Capital is not the average lender. We offer finance custom-made to meet the borrower’s objectives.”

To find out more about TierONE Capital’s commercial lending solutions and investment opportunities, click here.

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