Image: Point Polaris Managing Director, Andrew Hogan
Point Polaris achieved financial close across five off-the-plan apartment projects and one hotel project worth a combined end value of $320,000,000 in the first quarter of 2017.
The announcement by the privately-owned advisory firm signaled a bumper year for project construction and delivery, both for local and off-shore developers.
While Point Polaris said it was harder to secure traditional finance from the banks since tighter lending restrictions were announced last year, non-bank lenders and off-shore institutions have stepped in to fill the gap.
Each of these have achieved the required sales in order to meet financial close conditions from both bank and non-bank lenders, as well of cross-border transactions with offshore non-bank lenders.
Among the projects that have achieved financial close are the 142-apartment project ‘Reflections’ in North Melbourne, and the 93-apartment project ‘The Longhouse’ in Hawthorn.
'The Longhouse'Point Polaris Managing Director Andrew Hogan said that when combined, construction of the 380 apartments and 165 hotel rooms are set to generate approximately 500 local jobs at peak construction in a sector which is propping up the economy.
“Point Polaris has secured finance for clients on a record number of projects in the first quarter of 2017, in an economy where the banks are retracting from the market," he said.
"This just means that the non-bank and overseas lenders are stepping in to fill the gap.
“This is not to say that funding is not difficult, in fact it’s the most challenging environment we’ve ever seen, however the difference is that quality developers that step up to the plate and deliver quality projects in quality locations that achieve quality sales will still receive quality finance.
"It’s a flight to quality and our clients’ design-led projects are doing better than most," Mr Hogan said.
“The days of producing dog-boxes are over; in this climate these inferior investor-led projects simply won’t achieve the sales and required funding to get off the ground.
"It’s a great outcome for Melbourne as a city that is now in a position to welcome quality, design-led projects that suit the local market.
“While APRA and the Australian banks are making it harder for developers and overseas purchasers and developers to achieve finance due to a swathe of funding restrictions, Point Polaris has been very successful in achieving Australian bank finance for both local and offshore developers," he said.
'Reflections'Mr Hogan said that contrary to reports, there is no market oversupply and in fact more apartments are needed in order to meet the demands of the local rental market.
“Vacancy rates for apartments across greater Melbourne have just hit 1.7 percent. That’s a near-record low that if thought about in layman terms, translates to housing and apartment stock being vacant for just six days each year if re-let each year," he said.
“Our apartments are full. More construction across Melbourne is what’s required in order to house the record number of new immigrants and new home owners that are seeking a home, which in the year to September 2016 grew by a record 128,000 people.
“To anyone who would say that we are in a construction bubble, I would suggest they look at the facts to understand that all of this construction is simply what’s required to keep up with the demand."Mr Hogan said he believed the recent government changes to the first home buyer grants and stamp duty concessions were misguided.
“As an industry we have withstood a tsunami of events in the last 12 months that we as an industry have approached with resilience," he said.
"The government’s latest announcement has unintended consequences and will without doubt reduce supply to an already undersupplied market, pushing rents up, increasing purchase prices and making the entire market more expensive for everyone.
“Victoria will simply become less competitive and the doors are closing for business, rather than providing a hospitable environment to attract the offshore investment that we need in order to prop up our economy,” he said.