Developers See Light at End of Financial Tunnel

There is light at the end of the tunnel for developers as more competitive capital becomes available and the country drags itself out of a Covid-induced recession.

The pandemic is having a major effect on the property finance market with the majority of financiers initially retreating to take stock of existing exposures and watch as the situation unfolds.

The big-four have been urged to keep lending by the Reserve Bank of Australia meanwhile major property developers have identified finance as the biggest hurdle to new projects.

Both bank and private lenders are now emerging to capitalise on the market which has started to pick up from June.

However there have been huge variances in finance terms being offered by lenders, depending on their appetite and their existing portfolio of loans according to property finance advisors Darren O’Hanlon and Danny Kent.

“Even across the banks we are seeing material differences in finance terms offered for our client’s projects, with some agreeing to flexibility around pre-sales or deposits, whilst others are set on conditions that can’t be met in the current market,” said O’Hanlon.

The Ocian director said developers have a wide range of potential lenders who are both well capitalised and have an appetite for the type and size of projects they undertake.

“Having access to a broad range of banks, debt funds and private capital provides the ability to secure the right funding solutions at any point in the cycle,” Kent said.

“A project finance audit will provide borrowers with the confidence that they are getting the best terms available in market.”

Ocian sources debt and equity capital to support new acquisitions, refinance existing arrangements and fund property development.

The finance advisory team work with domestic and international banks, non-bank institutional lenders and investors, private debt funds and also family offices.

“Ocian can quickly assess your project and give independent feedback on your current finance arrangements, benchmarked to the broader market,” O’Hanlon said.

The Ocian directors advised that given the time of year, it's critical to get finance discussions started now to achieve funding while the market is open.

“It’s important to get early engagement now if you wish to secure property acquisition or development finance this year, given the increased volume of work in the lead up to Christmas and the general market shutdown over the holiday period,” O’Hanlon said.

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