In the lead-up to this month's Insights Series ‘How To Fund Your Development In A Changing Financial Environment’, The Urban Developer caught up with Matthew Royal, Founder & Director of
Development Finance Partners to get his take on what are some of the obstacles and solutions to funding a development in times of economic and financial change.
Matthew has extensive experience in the property development and investment industry; he has exceptional knowledge and understanding of the financial criteria and methodology used in assessing property development and investment proposals.
Matthew has participated in the negotiation and consummation of numerous significant property development and investment acquisitions and joint ventures, as well as being responsible for the finance raising and due diligence enquiries and processes within DFP.
The major Banks' general credit appetite for Property Development Finance has sharply deteriorated due to a number of factors. The reduced credit appetite combined with the deterioration of land values, increased development costs and the on completion values for residential apartment have resulted in an average increase of 200% in the amount of equity required than was the case only 12 months ago.
On a daily basis DFP receives requests for help from Bank customers after having been told by their existing Bank/s they can simply not approve any new construction finance for them on any terms, despite having been a loyal and performing customer of the Bank for many years.
Other factors -
Global Instability and heightened uncertainty is placing huge pressure on all internal banking regulators such as APRA, to force their local Banks to continue to strengthen their balance sheets to become increasingly “unquestionably strong”.
The main global factors which is of highest concern right now in the minds of Australian banks and central bankers around the world is the downside risk created by Falling GDP forecasts in China, and other emerging market economies are of concern, and of higher concern is the rapid run up in debt in the post GFC period. In China, especially, slowing economic growth has raised the possibility of a sharp increase in defaults, particularly within industries now burdened by an over investment in capacity.
There is no doubt the Australian Property Development Industry is feeling the effects of the sharply reduced appetite for construction finance. As Australia’s top property finance advisor, DFP is successfully arranging finance for its clients by taking advantage of the following new funding structures:
Matthew will be joining a panel in Brisbane, Sydney & Melbourne with David Kenney - Managing Partner of Hall Chadwick, Baxter Gamble - Managing Director of Development Finance Partners, and Adam Di Marco - Publisher of The Urban Developer/Director of Marquette Properties.
The event will include a 2-course lunch and a range of drinks.
Tickets are very limited, so make sure you get in while you can!