From the point of view of current funding options, the sector has seen quite a few new entrants in recent times, some of which struggled out of the gates and lacking in deal flow saw them funding “the best on their desk” and that resulted in some bad loans and a hasty retreat or reduction in appetite for the sector.
HCP is also seeing instances of a few loans playing musical chairs, looking to jump from one lender to the next in the hope of breathing new life into the project as the current lender loses patience or simply looks to exit in order to enable their capital investors to realise their returns. New lenders in particular, are quickly presented with those stale loans in the market place looking for a home.
The market place seems quite stable in terms of funding product offering and pricing. Some take more risk than others on pioneering product types or lower presales / exit but generally speaking most experienced lenders are presenting similar product within a predictable pricing band often driven by appetite, particularly for the new comers or those less experienced at pricing the inherent risks.
Infill residential remains a sound focus for small to medium size projects, although there are signs that the inner-city apartment market will produce opportunities provided that the land can be acquired at a sensible price. This remains the primary challenge to developers as there are clearly defined pricing ranges and construction has become more predictable albeit with continuing inflation to be provided for.
A bigger challenge is the master planned housing sector, particularly in SEQ where there is considerable demand but a significant undersupply as a result of continuing net interstate migration. However, without a change in the town planning approach at both State and council levels, this situation will continue to fester and put added pressure on existing land values, squeezing feasibilities and making it difficult for developers to make deals stack up.
Small industrial office warehouse and trendy ‘man-shed’ product continues to present opportunities provided the surround demographics and supply remain in balance and we see this continuing in the short to medium term.
Generally, HCP is seeing that there are plenty of sound projects suitable for funding, and provided the sponsors are financially capable, experienced and making sound decisions in respect of their builder and project consultant choices, there are signs that volumes will be consistent if not plentiful.Infill residential remains a sound focus for small to medium size projects, although there are signs that the inner-city apartment market will produce opportunities provided that the land can be acquired at a sensible price. This remains the primary challenge to developers as there are clearly defined pricing ranges and construction has become more predictable albeit with continuing inflation to be provided for.
A bigger challenge is the master planned housing sector, particularly in SEQ where there is considerable demand but a significant undersupply as a result of continuing net interstate migration. However, without a change in the town planning approach at both State and council levels, this situation will continue to fester and put added pressure on existing land values, squeezing feasibilities and making it difficult for developers to make deals stack up.
Small industrial office warehouse and trendy ‘man-shed’ product continues to present opportunities provided the surround demographics and supply remain in balance and we see this continuing in the short to medium term.
Generally, HCP is seeing that there are plenty of sound projects suitable for funding, and provided the sponsors are financially capable, experienced and making sound decisions in respect of their builder and project consultant choices, there are signs that volumes will be consistent if not plentiful.