With lending appetite from major banking institutions contracting, combined with an increasingly tougher financial environment for projects that are successfully funded, a new gap in the market has been formed that has so far seen a number of new entrants create development-specific funds that are already proving popular.
Last week, leading independent investment house Gresham Partners announced a new development finance fund that aims to offer a substitute to traditional funding models by lending some $500 million to both residential and commercial property developers operating within major metropolitan markets.
The firm is said to be selective in their analysis of projects, focussing specifically on residential developments that are positioned in high-quality locations that are identified as having a current lack of supply and offer a competitive quantity of existing pre-sales in place.
LendingHQ, a mortgage broker based in Geelong has also raised an estimated $1.5 billion in development finance following a marketing and development conference in the Chinese City of Shenzhen.
The private and commercial funding arms of the business aims to offer up to $150 million for development loans depending upon the desired lending criteria of prospective clients, with pre-sales not necessarily required and competitive interest rates from 6%.
In Victoria and New South Wales in particular, developer sentiment continues to be relatively strong across the board with demand for quality, well located projects amongst buyers remaining robust and the majority of off the plan settlements continuing to be fulfilled upon project completion.
With Q2 2017 around the corner, it is expected that developers will continue to pursue the favourable terms offered by non-bank lenders in the months ahead.Â
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