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Most banks have long memories and it’s those past experiences, which in all probability resulted in the writing off of a bad debt, that tend to have a strong influence on the executives responsible for writing the banks lending policy.
One such area of contention is the issuing of second mortgages and in most cases the approach by banks is consistent, driven by those past bad experiences.
So while there are sound arguments as to why it might actually be in the banks interest to allow a second mortgage, most credit/risk manager default to a position that will not impact on their security position and it takes some very careful negotiations to convince them to do otherwise. So lets look at the reasons why they have those concerns.
The bank does not think the developer has enough money – as the saying goes “If you want it they won’t give it to you and if you don’t want it they throw it at you”. It is true in most regards, that when considering a project a bank wants to be working with a sponsor who has the ability to invest the full equity requirement, also referred to as ‘skin in the game’, and a capacity write a cheque in the event of any unforseen cost overruns.
However, many smart sponsors choose to use Other People’s Money (OPM), usually so that they can get the best return on their funds by investing across multiple opportunities. So it is very important that the financial strength and experience of the sponsor can be demonstrated to the bank even if it is not all to be committed to the project in question.
Utilising second mortgage funding in order to expand the number of projects they can undertake is a smart way for a sponsor to leverage their return on equity provided they can show an ability to meet any unforseen financial pressures along the way. It is critical to give the bank a clear understanding of why the second mortgage funding is being used but also provide statements of position, group cash flows and approved standby arrangements to support the sponsor’s ability to meet their ongoing commitments to the project in question.
The Bank does not want any potential impediments to it realising on its security – In the event that things go wrong during a development, the bank will in most instances look to recover its exposure by disposing of the security via a quick sale rather than undertaking a lengthy workout. Even in the case of a development project, banks do not want to ‘take control’ of a project unless absolutely necessary and will usually appoint a receiver or administrator to undertake the exercise of completing the development and sale as soon as practicable with the minimum of additional expenditure.
Their concern is that where there is a second mortgage in place (and dependant on the terms of any priority agreement in place), the potential exists for that mortgagee to frustrate the actions of the bank by arguing that those actions prejudice their security position. Alternatively, while there may be no default or cause for action on the banks part, the second mortgagee may decide to take action under its securities which forces the banks hand to either take its own action in priority to the second mortgage or pay out the second mortgagee in order to gain full control. Both of these scenarios played out during the GFC and previous market corrections, continuing to make all banks hesitant about transactions involving second mortgages.
One way to address these issues is to have a reputable second mortgage provider who the banks are comfortable with and trust not to take any extreme actions during the life of the project. Additionally, the banks will require the second mortgagee to sign a priority agreement which in effect cedes all of its rights to the first mortgagee while its debt exists, effectively preventing the second mortgagee taking any action that the first mortgagee does not want to occur.
Developers skin in the game – As previously mentioned, all financiers, be they first or second mortgage providers want to see that the developer has an appropriate amount of their own “risk” money in the project – the view being that the developer will be more likely to act in the right way if they have an appropriate amount of their own cash at risk in the project. The current view is that the developer must be providing at least 10% of the required capital stack in a project.
In the eyes of the banks, this is a different risk to having a capacity to meet your obligations as detailed previously. This is about ensuring that the customer is motivated to act quickly to deal with a problem that requires either financial or physical action when it occurs and their concern is that if the equity at risk is sourced via a second mortgage provider then:
There is less motivation for the sponsor to take the required action and they have no power to require the second mortgagee to act or input further equity.
In fact it is often the case that the second mortgagee is a passive syndicate of investors with limited ability to raise additional funds or make quick decisive decisions which leaves the bank having to deal with the problems associated with the projects but also having to be conscious of not acting in a way which is prejudicial to the interest of those investors which is a complication they do not relish.
In summary, banks tend to view all second mortgages as complicating transactions rather than adding value as their interests are not always aligned with those of the borrower and it is therefore a negotiating exercise that requires a complete understanding of the interests of both sides. At HoldenCAPITAL we are often required to obtain a senior banks consent to a second mortgagee position in order to get the best outcome for our client. We do this by clearly demonstrating the positives that the structure brings to the transaction and how the risks will be dealt with.
 
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arrange construction finance and invest in projects through their equity fund, Queen Street INVEST. To discuss your project finance requirement please call (07) 3171 4200 or visit HoldenCAPITAL <a href="https://www.holdencapital.com.au" target="_blank">here</a>.
 
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Why the bank won't let you have a second mortgage

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Currently we are seeing a constant barrage of articles from all sectors of the press and social media regarding the onset of an impending financial readjustment or even a collapse, with some arguing it will be worse than the last GFC.
There are many areas being pointed to as the likely root causes or triggers for this financial Armageddon and most are driven by international triggers well beyond our control, however the potential ramifications on our markets are being touted as devastating and even their potential occurrences are impacting our day to day business confidence.
One key area of influence that we have touched on previously is the impact of the post GFC capital requirements on our banks and how that impacts their appetite for construction lending. It is important to understand why this is happening but of more importance is what you need to do to ensure your business is not adversely impacted.
While the changes in bank policies towards construction lending will fluctuate within certain low risk parameters, these overriding regulatory requirements are not temporary responses to a specific event; they represent an ongoing constraint that will impact the pricing and structure of all future loan transactions and represent a new world order in construction finance.
Fundamentally this is because Australians have an expectation that their savings accounts will always be there when things get tough and they expect their politicians to ensure that this is so. No political leader wants to be explaining why they allowed unscrupulous lenders to lose the hard earned savings of their Mum and Dad depositors.
Accordingly, Governments of both persuasions continue to apply pressure on the major banks via the available regulatory levers to ensure that their contingent exposure to underwriting a portion of the banks deposit funds is appropriately controlled and that the banks risks are “well managed”.
History tells us that during booms, lenders can get over-excited and sometimes leads to being careless in the race to secure a share of the profits being generated as markets run hot, and then as it peaks and the signs are there that risks are increasing, the temptation to do “one more deal” often leads to losses.
The regulatory requirements being imposed on the banks are designed to minimise this risk and this is demonstrated by the recent changes seen their attitude towards construction lending that has been substantially pared back to ensure that they maintain appropriate capital reserve exposures.
Putting aside the question of the profitability of these types of loans to the major banks which we have also addressed in a previous paper, all bank loans of this type are now assessed on deal-by-deal basis with all the relevant factors input into a complex risk model in order to monitor the banks risk profile as prescribed by ASIC. As a consequence, there are far fewer “discretionary” decisions available to your bank manager when he deals with your application, which also reflects the lower risk appetite now prevailing amongst the major banks.
As a result of all this, developers can no longer expect their regular bank will provide the necessary funding just because “they have always done it in the past”. 
As many are learning, the fact that you may have had a 30+ year sound relationship with your bank is of no consequence and does not guarantee they will lend you money when you ask them for it, or on the terms they previously have.
With the banks limiting their exposure to the sector and pricing risk far more keenly than in the past, there is now a wide range of alternative providers of debt, equity and all the permutations between entering the market.
The challenge for tody’s developer is identifying which ones best fit both their business and specific project needs. This in turn requires a readjustment of expectations as to what constitutes an appropriate finance cost when assessing project viability.
While all this sounds like the industry has become a lot more complicated, and in some ways it has, it also means there are far more options available to Developers, enabling them to fulfil their project ambitions and maximise their available capital.
As a consequence, knowledge of all these competing options is a critical prerequisite to getting the best outcome. Even more importantly, engaging the right finance consultant who can navigate your transaction through to a successful conclusion, just as you would with any specialised requirement such as town planning or engineering solutions, is the key to securing funding and ensuring a profitable outcome for your next development.
As always, your success is directly related to how well you adapt and deal with change and as the saying goes, there is nothing surer than change. So make sure that you are setting your expectations at the appropriate levels and getting sound advice.
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arrange construction finance and invest in projects through their equity fund, Queen Street INVEST. To discuss your project finance requirement please call (07) 3171 4200 or visit HoldenCAPITAL <a href="https://www.holdencapital.com.au/" target="_blank">here</a>.
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Development finance new world order: Resetting your expectations for success

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We often see small to medium sized property developers struggle for cash flow and, in our experience, it is the single biggest reason for developers going under and as they say, “cash is king”!
The very nature of property development is that a project will only incur costs throughout its lifecycle until the construction is complete, titles are available and the properties are sold and settled.  In most cases, this process takes some 12 to 18 months and that is a long time to be expending money, even if it is borrowed and not receive any income. 
By definition property development is a capital-intensive and cash flow poor industry and developers who don’t have an ancillary business that provides them with an alternative source of income need to work smarter at what they do.
Some property development cash flow strategies to consider
1.    Be smart and replace some of your equity during the project lifecycle
How and when you utilise your capital can greatly reduce the demand on your cash flow and it is important to remember that in most instances, project risk reduces as the project progresses. It therefor follows that the earlier in the project timeline that you borrow money, the more expensive that money will be. 
Obviously, the most capital-efficient way would be to use other people’s money (OPM) as much as possible, however that comes at a cost and delaying the point in time when you ustilise OPM will reduce this cost.
As an example, in the current market environment the cost of funds for any ‘non-mortgage secured’ money i.e. risk equity, will reduce over time as shown below:
2.    Schedule projects efficiently
If you only have enough equity to develop one project at a time the ability to maintain a consistent flow of projects and resultant profits is significantly reduced. By taking advantage of the above principals you may be able to make an “equity redraw” and introduce OPM to replace some of your existing equity once you have secured the development approval and some pre-sales.  This will then allow you to utilise the capital released to secure your next project without having to wait until the current project is completed.
This approach leverages your equity to make it work more efficiently as well as bringing forward the income streams for future projects and there for improving your cashflow by shortening the timing between project completions and the resultant profits.
3.    Keep your overheads low
A very effective strategy many small to medium size Developers use is to engage a multitude of project-specific consultants. By doing this, those consultants are a direct cost to a specific project and the developer avoids carrying ongoing salaries as part of his overheads. In some instances there is also the potential to delay some of the payment for the costs involved to coincide with project milestones further improving the project cashflow.
4.    Include a Development Management Fee
By including a development management fee into your project feasibility, you allow yourself to receive income during the project lifecycle. In many instances, the first mortgage construction finance provider will allow a periodic development management fee to be advanced from the loan as part of the professional fees but remember that it needs to be kept reasonable, reflecting your contribution to the project.
5.    Negotiate your settlement terms
During the early stages of a typical development project lifecycle, the most capital-intensive part will be the settlement of the development site. By negotiating favourable settlement terms, you can potentially delay paying for the property until you have substantially removed the Approval risks associated with it. This in turn will improve the funding costs and the project cash flow in general.
6.    Have a safety net
If possible, have another business that you can operate in parallel with the development operations. This applies more to smaller businesses that are largely undertaking one project as a time and do not have the capital to smooth out the resultant cash flow lumpiness. Having a small income generating business that requires minimal capital and operating overheads such as a real estate rent roll, small equipment hire business or similar means that when the market is in a serious downturn and you need to be able to just “sit on the beach” and wait it out, this alternative income can be a real godsend.
All of this is important but the real challenge is to actually put it into practice. Sitting down with your accountant and lawyer is a good start but they tend to be reactionary and can only provide some of the answers. 
A critical piece of the process is having a clear understanding of the finance and capital structures that are actually available to you and then building your strategy around the reality of those solutions rather than developing a concept and then having to compromise it to meet the market realities. This is where a professional construction finance broker can really add value to your business so the real question is, will you do something about it today or wait until it becomes a regret?
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arrange construction finance and invest in projects through their equity fund, Queen Street INVEST. To discuss your project finance requirement please call (07) 3171 4200 or visit HoldenCAPITAL <a href="https://www.holdencapital.com.au/" target="_blank">here</a>.
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Cash flow the biggest killer of property developers

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From time to time we’ll see a first time developer who has worked up a project to the stage of it being good enough to be considered by a funder, however they are short on equity.  
Who better to approach than people who already know you and trust your ability? They have seen you cook a good steak on the BBQ, which you assembled without the instructions, so if you can build a flat pack BBQ without stuffing that up, how much harder can it be to build a 5 storey residential tower?  
Often a first time developer facing this kind of scenario will approach family and friends to raise the equity required to get the deal over the line. But given the relationship that the developer has with these ‘investors’, these form of equity loans are never documented properly, if at all. Time and again we hear the response, no need “He’s a mate and a good bloke” or “What could possibly go wrong?”  
Well here are some reasons not to lend money to, or borrow money from, friends and family: 
1. The Loan Has No End Date and sometimes no interest rate.  These are not really loans in the true sense, as they tend to have no fixed repayment date and often don’t include an interest rate on the loan. So the friend doesn’t know when their money will be returned and the borrower often doesn’t know when exactly the project will be finalized and when he can repay the loan.  
This leaves both parties in limbo and doesn’t set any firm expectations. But as time passes and the inevitable delays roll out, the uncertainty can lead to stress in the relationship as the borrower worries that the lender expects repayment and the lender worries about when or if they will be repaid.   
Alternatively, the borrower may not realise that there is a sense of urgency to repay the loan and without a deadline; it becomes their last priority. The developer won’t face any repercussions for not repaying such as late payment charges, a higher interest margin or a negative impact on their credit score. Without the threat of penalties, they have no motivation or urgency to repay.  
2. It’s Always Difficult to Ask for the Money Back  It can be difficult to request repayment of a loan from a friend or family member. More than likely, the lender cares about the borrower and doesn’t want the borrower to feel awkward. The lender may continue to worry about loan repayment and thus shut down some or all communications with the borrower in order to avoid talking about the loan.   
3. It Can Make Social Events Awkward  Family get-togethers or social events can suddenly become very uncomfortable situations. The borrower may feel a need to avoid the lender for fear of discussing the situation, especially if they can’t add any certainty to a time to resolve the matter. Other family members who know about the loan can also become drawn into the situation with disastrous results. 
4. The Borrower May Ask for More  Once you have lent money to a friend or family member, this person may return when he or she needs more money. In addition, other friends and family members may also ask you for a loan. It’s always easier when they know you’ve loaned money before.  
6. You Might Need the Money Yourself  You definitely want your money returned, but your circumstances can also change and you may need your money now! What if you lose your job and you spend your entire emergency funds while searching for a new job? What if repayment of the loan marks the difference between you keeping your house or losing it to the bank? Not receiving repayment of the loan in a timely manner might spell disaster for you and your family. 
7. You Could Lose Your Money and Your Relationship  
If you lend money to a friend or family member you need to be aware that you may not get your money back and your relationship may never go back to normal. This will cause tension between you and the borrower, and may also cause guilt, remorse, and anger amongst others who are related to you both. 
In summary, if you are considering lending money to a family member and want it to be treated as a loan rather than a monetary gift, there are a few things that should be done: 
<ul>
<li>Seek legal advice to ensure that your agreement is properly prepared and correctly reflects the intentions of the parties; </li>
<li>Ensure that all parties to the loan are named in the loan agreement; </li>
<li>Ensure that the loan agreement is correctly signed and is dated by all of the parties; </li>
<li>Be specific and include the amount of the loan, whether interest is payable and the dates for repayment; </li>
<li>Specify what is to happen if the interest is not paid or repayment is delayed. You also need to agree what your rights will be if these events happen. </li>
<li>Consider registering a mortgage or a caveat to secure the loan; and </li>
<li>Ensure that each party to the loan agreement keeps a copy of the loan agreement in a safe and easily accessible place. </li>
</ul>
These suggestions may seem like overkill when you are dealing with friends or family and may be difficult to discuss initially, but if handled in the right way, with the approach that “these things protect both of us, not just me”, they may prove invaluable in the long run.   
After all, nobody wants to be thought of as the third alternative in the categories of the three “F’s”.
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arrange construction finance and invest in projects through their equity fund, Queen Street INVEST. To discuss your project finance requirement please call (07) 3171 4200 or visit HoldenCAPITAL <a href="https://www.holdencapital.com.au/" target="_blank">here</a>.
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The three F’s of dumb capital – family, friends and fools

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The lure of a pot of gold at the end of the rainbow certainly attracts many property developers.
The promise of large tranches of cheap off shore funding with minimal strings attached and for no particular reason they have chosen your project to invest it in. Who could resist? Often, when it all seems too good to be true, it usually is.
The finance industry also has its share of doubtful operators who specialise in taking large upfront fees while offering developers the promised pot of gold, and while these overnight finance ”experts” have a case to answer, I struggle to sympathise with the developer who heard what he wanted to hear and proceeded to run head first into a brick wall under his own steam.
The combination of the developer’s entrepreneurial spirit, optimism and confidence that they have the skills to deliver the project while overcoming all the potential obstacles, gives them the courage to borrow millions of dollars to turn a piece of land into something the market will buy.
And those qualities are all admirable and contribute to their successes, particularly when you consider that the majority of Australians will spend their whole lives in employment, reliant on a weekly pay cheque and that less than 1 on 4 take the leap to start their own business.
However, of all the business opportunities that you could take on, like buying a franchise, leaving the big firm and starting your own consultancy, or opening a café, only a select few take on the risks of property development.
Risking substantial capital and borrowing significant debt just to make a pre-tax profit of between 18-25% on the total funds utilised! Frankly, I take my hat off to those property developers because there are a lot of obstacles to overcome and a lot of variables that can go either way.
They say “the harder you work the luckier you get” but it is this innate sense of optimism peculiar to developers that seems to enable them to take on these levels of risk and more often than not win.
Unfortunately sometimes that optimism goes into over-drive or is born out of naivety and many developers live by the mantra “think big and multiply” only to hit an even bigger wall.
The problem with all this optimism/naivety is their reliance upon those factors at play outside of their control, and the amount of energy and time spent chasing those rainbows. Imagine if they put that energy and time into the core elements of their business creating a better product and the mechanisms to sell and deliver it?
Having seen quite a few developers chase those rainbows I thought about what in particular motivates an otherwise smart person to throw $20,000 - $50,000 in non-refundable application fees at a so called expert finance broker who has no fixed office address or one who has just appeared in town with a “cheap offshore funding” offer, neither of them with even one reference from a happy customer.
The only answer I could come up with is that ultimately they want “Dumb Money”, that in return for a modest dividend/profit share/interest rate doesn’t ask questions and leaves them to largely do as they please with the funds.
But the truth is that if their project was that good and the returns they were offering truly reflected the market risks, a local investor would be more likely to open their chequebook.
What we constantly observe is investors looking to max their return while taking as little risk as possible, which is only natural, while the developer chases large chunks of naïve money that they can manipulate to only provide low returns for what is actually a higher risk than they appreciate. While this reflects typical market forces at work, I question the level of the so-called sophistication on both sides of the equation.
Some people find satisfaction in making money through others losses, but a zero sum game where one party loses and other wins happens all too often in business, including development. As Henry Ford apparently said, “a business that makes only money is not a good business’.
I don’t believe that it is too idealistic to think that deals can be structured in such a way that both parties can win. While Mr Developer can argue that those investors would only otherwise be getting 2%pa in the bank, the fairness comes into it when you compare the risk of that return versus the risk their money is exposed to and the reward being paid.
I have made the case in a previous commentary that developers need to work harder on ensuring that they secure the services of skills consultants/advisors in those areas where they lack the necessary expertise in order to ensure they achieve their targets and this is another instance where too much energy is expended on saving a cost that is disproportionate to the projected outcome.
We are lucky that in Australia there is quite a deep market of passive investors willing to take equity positions on development projects. So it makes you wonder what developers could achieve if they used the right consultants and redirected their energy/time into enhancing their core skill sets, how much more successful their business would be in 5-10 years from now?
This is not to say that you should just accept the finance framework that is offered to you by your local bank manager. The HoldenCAPITAL business is based around pushing boundaries on finance to optimise project profits, we certainly don’t recommend that you don’t base your whole business model around that elusive pot of gold sitting at the end of the rainbow.
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arrange construction finance and invest in projects through their equity fund, Queen Street INVEST. To discuss your project finance requirement please call (07) 3171 4200 or visit HoldenCAPITAL <a href="https://www.holdencapital.com.au/" target="_blank">here</a>.
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Chasing rainbows, overseas funding and other unicorns

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According to Wikipedia, “Sweat Equity” is defined as:is a party's contribution to a project in the form of effort and toil, as opposed to financial equity such as paying others to perform a task.
Sweat Equity is normally initiated as a cost saving exercise, where in the case of property development, the developer shoulders the task of achieving the “highest and best use” for a property. Whilst this will often involve the collective efforts of industry professionals such as architects and town planners, it is almost always in consultation and at the direction of the property developer that first identifies the opportunity, and at the end of the day will speculatively outlay the cost of engaging such professionals.
So when does sweat equity via uplift in land count?   
It should not be overlooked that in many cases successful developers are already on the path to creating sweat equity in negotiating a Vendor to a price that recognises the current “value” of a site based on its highest and best use today, versus what can be achieved in the future.
Taking strategic control of a property through an option agreement or instalment contract while you work up an appropriate town planning or design strategy can also provide potential uplift which can later be included as part of the developers sweat equity.
That sweat equity effectively represents the uplift in value that is created without changing the visual presentation of a property. It should also be noted that a change in market conditions and specifically a rising market should not be construed as sweat equity where these changes occurred over a long period of time or were unrelated to the developers strategy to redevelop the property. Buying a property at the bottom of the market and holding it through an improving market in the hope that it will improve in value is not sweat equity. 
Quantifying sweat equity in terms of property will normally be proven or measured by comparing a purchase price or value at a point in time to the current value of the property at the point in time where that sweat equity is required to be assessed for the purpose of securing a funding outcome.
In most respects HoldenCAPITAL and prospective lenders view on sweat equity is similar to that of a valuers, on the basis that it is an art not a science. It requires an analysis of things like the market, the developers experience in undertaking a project of that size and scope and the planning and research they have put into conceiving the project (i.e. not just dumb luck), as well as the time and costs incurred including the retention of appropriately credentialed professionals engaged by the property developer.
To further define sweat equity we think it is important to qualify it by suggesting that it is value created that was perhaps not obviously apparent and easily achievable by the “common man”.
To use another art analogy, “one man’s art is another man’s trash”. Whilst this is perhaps a little extreme, it is fair to say that while most Lenders will recognise the sweat equity others, for reasons known only to them, will not. It is therefore, extremely important to clearly articulate the effort and contributions that have been made by the developer in order to justify the quantification of their  “sweat equity” when the valuation uplift is being assessed.  
It should also be pointed out that hard work and the expending of cash equity will not always result in an uplift in valuation.
Some examples of sweat equity can include but are not limited to:
<ul>
<li>a change in permitted use of the property;</li>
<li>rezoning;</li>
<li>changes in planning such as increased heights, configuration allowances, product mix, etc.;</li>
<li>a change in design of the proposed redevelopment; and</li>
<li>amalgamation of adjoining sites;</li>
</ul>
This is an area where developers often fail to accurately articulate where their sweat equity has been added so that it should be recognised by lenders. Seeking advice from an experienced construction finance broker can ensure that this doesn’t happen and make a significant difference to the final equity contribution the developer is required to contribute.
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arranged over $300 million of construction finance in 2015 across 52 projects. To discuss your project finance requirement please call (07) 3171 4200 or visit <a href="https://www.holdencapital.com.au/" target="_blank">www.holdencapital.com.au</a>
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When does sweat equity via uplift in land count? HoldenCAPITAL

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I have noted the growing frustration amongst developers in recent times with the banks requirement for higher pre-sales, particularly as the market shifts more towards owner occupied product and away from investment sales.
So I thought it worthwhile taking the time to explain that essentially, it is a means to reduce the capital impost on their own balance sheet position and maintain their return on capital that drives this requirement.
I have previously talked about the new world order in construction finance and the impact that the regulatory changes are having on our sector and this issue is directly related.
Without wanting to get too deep into the processes involved, simplistically, the banks are required to risk model every new loan transaction, which then directly determines the level of risk capital they need to allocate in their balance sheet. Construction finance can attract a high level of risk capital and given the outcomes of these models are regularly audited by APRA to ensure compliance, the banks are very motivated to achieve a lower score which means less risk capital is required improving both their return on capital and potentially an improved share price.
As a result, two key risks banks look to mitigate when assessing a construction loan application are the market and financial risks.  If a bank is required to take control of a project prior to completion, it may be forced to sell any unsold stock to recover its debt and it will generally be restricted to marketing and selling that stock in the local market. Before committing to the loan, the bank will generally require a number of pre-sales to be secured from local buyers to satisfy it that that local market actually has an appetite for the product at the price point implied in the feasibility. A pre-sale requirement of around 25 to 30% of the project stock is normally considered sufficient to mitigate that price point risk.
Because of their very nature, offshore pre-sales do nothing to satisfy banks that the local market has accepted the product or price points and it can often be the case that those sales are actually motivated by other needs such as a future migration opportunity for the buyer. As such they don’t reflect the local demand that the bank is looking to satisfy in the event that they are required to sell unsold stock in a default scenario.
The second risk mitigated by pre-sales relates to how much of the banks capital is exposed in the event of a default by the borrower. How many pre-sales will need to be secured to adequately mitigate this risk is determined by the loan metrics comprising the ‘Loan to Cost’ and ‘Loan to End Value’ ratios. Banks use these as a means of determining the level of equity the developer has at risk in the project and therefore how much of a discount the project can stand before that equity is exhausted and the Bank’s capital is at risk. Both are also key drivers in the loan risk model I mentioned earlier.
The ‘Loan to Cost’ ratio largely measures the cash equity contributed by the developer and determines the loan funds that will be required on a “cost to complete” basis, ensuring the bank always has sufficient funds to complete the project while maintaining the level of exposure they committed to at the outset the completed stock settles for its full on completion value.
The ‘Loan to End Value’ ratio measures the banks exposure relative to the market value of the completed product and as such is a measure of how much discount the product can bare before the bank is exposed to a capital loss. The higher the leverage the more pre-sales are required to ensure this risk is minimised. Traditionally Banks were keen to see that there were sufficient pre-sales to ensure that in the event that no further sales were achieved during the construction phase, there would still be an ability to refinance the balance stock at or close to a 50% loan to value ratio. This was reflected in presale requirements ranging from 30-50%, however as they have become more concerned with the state of the markets in terms of oversupply and a potential fall in value of completed stock, the requirement for increased presales to minimise this risk has become more important in their credit modelling and assessment process.
Banks also prefer pre-sales mitigating this financial risk to be by way of local sales because in the event that they end up in control of the project, they believe they will have more success in enforcing the terms of the sales contracts against local purchaser to settle. Historically, it is almost impossible for banks to enforce against foreign buyers and this is another negative factor when inputting the deal metrics into the banks risk model.
Most banks will allow 10-20% presales to off shore purchasers but will usually insist on closely vetting the contracts to satisfy themselves as far as possible of the bona fides of those buyers. This due diligence approach is also applied to the local buyer contracts, which in the bank’s eyes represent their primary means of recovering both their capital and their targeted interest return when they approve the transaction.
So in summary, the banks fear of foreign buyers is primarily driven by the risks that they represent to the banks ability to recover loan capital but more importantly, the impact that they have on the banks own balance sheet from a capital allocation perspective which in turn has an impact on their share price. Its clear from this why we are seeing a rise in the private lenders participating in the sector and as I have previously commented, this is a permanent structural shift and one that developer’s need to come to grips with and revise their business plan for funding accordingly.
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arrange construction finance and invest in projects through their equity fund, Queen Street INVEST. To discuss your project finance requirement please call (07) 3171 4200 or visit HoldenCAPITAL <a href="https://www.holdencapital.com.au/" target="_blank">here</a>.
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Why the banks fear foreign pre-sales: HoldenCAPITAL

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<img src="/images/2016/06/22/Holdencapital_banner.jpg" alt="" width="504" height="106">
SPONSORED POST
The current Australian residential property market over recent years has gone from strength to strength.
With interest rates at one of the lowest points in Australia’s history, our current low currency rate attracting overseas investment into Australian property and limited supply levels in many capitals post the GFC, this has lead to a property market ranging from solid in some locations such as Brisbane to booming in areas such as Sydney and parts of Melbourne. 
An indication as to where our construction industry is at can be gained from the number of cranes on our city skylines, currently there are over 647 across Australia’s cities of which 79 percent are residential, 9 percent commercial and 12 percent covering the rest of the sectors.
Accordingly, with the major banks in Australia under strong regulatory pressure as we have previously highlighted, we have now reached a position where they have practically stopped lending on major projects for all but the very best of their institutional and high net worth corporate clients. Most developers are struggling to understand why all of a sudden they are faced with a problem that they can no longer get bank finance on the terms traditionally available.
The reality is that the major banks risk departments are now calling the shots, even though their front office credit department may have approved the project. With thousands of properties currently under construction throughout Australia, particularly in terms of apartments in concentrated locations within the major capitals there is a growing concern within these risk departments as to the level of potential settlement risk.
This in turn is borne out of their concern that many investors will not achieve finance approval for their investment if the oversupply results in their purchase price being “out of the money” as a result of falling values and some cases a two tiered market emanating from these oversupplies.
That said, there are opportunities for developers who have their finger on the pulse of the current changes in market demand for product types and mix and are ready to provide the appropriate supply.
William Arthur Ward said that "The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails."
There has also been a strong shift in South East Queensland from an investor market to one which is catering to a growing level of owner occupier demand and the smart developers have already taken this into account in configuring their projects.
Five years ago, the majority of the apartment market was demanding more 1 bedrooms, 60 percent and balance was split roughly between 2’s (20 percent) and 3’s (20 percent). Overtime this moved towards a greater No of 2’s with the 3’s remaining static. Now with the current market turning more towards owner occupiers the mix is more 60 percent 2 bedrooms and 20 percent 1‘s and 20 percent 3’s.
There have been a number of developers who have also targeted their next projects to be boutique and smaller in size, focusing on inner suburban locations but away from the high rise nodes. Some have also diversified to commercial and mixed use, while others have focussed on age care or child care in an attempt to capture a share of a growth sector.
Some developers have even made the switch away from apartments and medium density to townhouse and land subdivisions as the market for this product has shown good positive signs in recent months.
A similar ripple effect has also taken place in the construction finance sector. In the previous year we saw most new projects placed by HoldenCAPITAL with the major banks and around 33 percent set with non-bank lenders. With the major banks effectively shutting their doors on many clients we have seen this balance shift significantly with nearly 66 percent of all transactions settled with the non-bank sector.
We have also seen a rise in the number of developers requiring swift finance solutions to secure sites having acquired the site, obtained their approvals and some even starting early works in an attempt to meet market demand only to be disappointed by their house banks declining the finance. While switching to a non-bank lender comes at a cost (between 2-4 percent in terms of the interest margin), many developers are finding that the time saved not having to secure the high presale commitments required by the banks (100 percent+ of the debt), enables them to start the project far sooner and to take advantage of selling to meet a current demand while constructing.
This massive shift toward non-bank finance is not a short term aberration and clients are finding that in many cases they have been much easier to deal with, require less constrictive terms and conditions and are capable of settling within quite short lead times. If you are finding that dealing with major banks stalling your project it might be time to see a construction finance expert and see what other options are available.
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arrange construction finance and invest in projects through their equity fund, Queen Street INVEST. To discuss your project finance requirement please call (07) 3171 4200 or visit HoldenCAPITAL <a href="https://www.holdencapital.com.au" target="_blank">here</a>. <a href="https://www.holdencapital.com.au"></a>
 
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How developers face a changing property and finance market: HoldenCAPITAL

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<img src="/images/2016/05/25/Holdencapital_banner.jpg" alt="" width="603" height="127">
SPONSORED POST
The property development scene continues to evolve and developers are always looking to find new ways of improving their product and returns, however there are a number of commonly used acquisition strategies that they continue to utilise and I thought I would evaluate the 5 most common strategies and look at why they are effective.
1. Buy and hold strategy
This is where the developer purchases the property and holds on to it long term while waiting for the right market conditions to maybe reposition its use via a change of zoning and then redevelop it. To be effective there needs to be a cash flow generated from the property via a retail tenancy or similar that enables the developer to achieve a neutral cashflow utilising a level of debt funding that is prudent but maximises his effective use of his capital. Ideally if it can amortise some of that debt over time, all the better. Ideally this gives the developer the option to sell a rezoned site at a profit or assume the development risk and achieve an enhanced return. This strategy requires a significant capital outlay and the return may only be marginal if the full development strategy is not taken up. 
2. Buy and on-sell
The developer may purchase a property with an intention to purely on-sell it in the short to medium term. This could be due to identifying an opportunity to secure good terms or a low price enabling a profit to be made from a quick turnaround sale. This might be achieved by offering to purchase with a cash unconditional contract that might be attractive to a purchaser under financial stress enabling you to negotiate a lower price. Alternatively you might identify the ability to obtain a development approval and significantly increase the site value enabling a quick on sale where there is strong demand for the amended use. This approach is much smarter the being the biggest idiot who pays top dollar for a prime site already with a DA in the hope that he will then make a development profit. 
3. Option contract
A number of creative developers seek to secure a property by putting it under an option contract enabling them to then work up a strategy and either on-sell or develop. This is a creative way to acquire control of a property without having to own it. If they take the on sale route, there is the added benefit of a potential stamp duty saving (please take advise from your solicitor as there are varying state legislations in respect to this strategy), as the developer has not legally purchased or settled the property but has a legal right to deal with it including transferring their rights under the option agreement. This may include obtaining a development approval to increase its potential and enhance its value. This method of acquisition allows a developer to have control over the property buy not requiring to put much cash into buying the property until they have increased the value of the property, example by obtaining a DA. 
4. Buy &amp; develop
Clearly this is the most common strategy that a developer will utilise especially in a quiet market where there are opportunities to buy in at low prices. An example of this was in 2008 during the GFC here a number of developers needed to sell property at liquidated prices. Over the years the market improved and the property would have increased in value to either develop then or sell at a profit. If a developer has acquired a site in a soft market, then there could be good potential uplift in the land. However, if they are in a cooling market then they may have purchased a  site at top prices and find themselves in a challenging situation. The current market does indicate that sentiment is easing and that there may be risk of oversupply in some locations. 
5. Development agreement 
This is where a developer secures a deal with a land owner. This is typically called a Land Development Agreement (LDA), where the developer has the experience and skill set to obtain a development approval and complete a development. The land owner retains ownership of the land for the developer to develop and receives his land value along with a share in the end profits. This is a good win-win solution for both parties. This scenario occurs more frequently where the land size is large with multiple stages enabling the developer to undertake the project without the need to purchase and hold the balance land over an extended period. In most cases the land owner is not experienced in development and benefits from a share in the uplift in value created by the developer which they would not ordinarily get to do if they tackled the DA process by themselves. As always, you need to do your due diligence on who you do business with and take appropriate advice as different states have differing stamp duty rules which may apply. 
Conclusion 
Each of the above acquisition strategies have different pros and cons. There may be stamp duty implications that may or not apply to the purchase. The capital component is different for each scenario and market conditions can change as well, so a developer will need to be very mindful of current market conditions and be ready to adapt should conditions change and seek appropriate advice. 
For example, the construction finance with major banks has shifted from fluid to extremely limited within the last 6 months. Most developers who acquired their sites last year had expectations that their bank would automatically provide them with terms as they had done in the past. However, all major banks are now very cautious with their lending and are doing so at reduced levels of exposure with many developers now find themselves committed to their site but not having certainty of the funding required. 
Developers need to broaden their understanding of the growing number of alternative funding options that are available to them as the construction finance sector is rapidly changing. 
Just as you would normally take advice from an experienced town planner before lodging a DA, it pays to seek expert finance advice when considering to purchase a property to develop. By working closely with a specialised financer who understands your needs, the market conditions and the structure being utilised to acquire the site places you in a strong position to find the best construction finance solution for your next project.
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arranged over $300 million of construction finance in 2015 across 52 projects. To discuss your project finance requirement please call (07) 3171 4200 or visit <a href="https://www.holdencapital.com.au" target="_blank">www.holdencapital.com.au</a>
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Top 5 acquisition strategies for property developers: HoldenCAPITAL

There’s a quiet patch of <a href="https://www.apartments.com.au/developments/hawthorn-vic-3122">Hawthorn</a>, between the bustle of Glenferrie Road and the curve of the Yarra, that rarely sees change, and even more rarely, new apartments. But that’s exactly where <a href="https://www.apartments.com.au/developers/pomeroy-pacific-quattro-corp">PQD</a> is planting Kooyongkoot: a deliberate, 18-residence answer to the question of what downsizers actually want.

“This is something this pocket of Hawthorn has never seen before,” says Fil Gacesa, head of sales at PQD. “<a href="https://www.apartments.com.au/new-apartments/kooyongkoot-hawthorn-1-kooyongkoot-road-hawthorn-vic-3122">Kooyongkoot</a> will deliver just 18 large-scale apartments in the heart of Hawthorn. It is the true definition of resort-style living.”

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/59D7VxzltmM?si=1iCzRD7FRneKryfv" title="YouTube video player" width="560"></iframe>

That scale is central to the story. It’s what allows for two dedicated lift cores, short corridors, and a generous lightcourt that draws natural ventilation and sunlight into every residence. It’s also what makes room for the sort of amenity usually confined to high-density towers: a fully equipped wellness centre with infrared and traditional saunas, yoga and pilates studio, cold therapy shower, and treatment room. There’s a golf simulator, car and dog wash stations, and extensive storage too, not bolted on, but baked in from the start.

But more than the checklist, it’s the design intent that carries weight. “This project has been many years in the making,” says Mark Pomeroy, Director of PQD. “Not just in planning, but in listening, to what our buyers and the local community are looking for”.

[smartcode_project:default project_id=102717 project_image_fid=355289]

That listening shows up in the materials, oak floors, natural stone, V-ZUG appliances, and in how space is handled. Penthouses feature private rooftop terraces with pools. Terraces and garden residences embrace outdoor connection. Inside, the layouts skew large and open, geared for hosting, not just housing.

Architecturally, <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a>’s approach is grounded. There’s no reaching for spectacle here. Instead, the building offers a sculptural calm, anchored by landscaping from Eckersley Garden Architecture.&nbsp;

“We wanted to create spaces that feel expansive, serene, and meaningfully connected to daily life,” said founding partner Chris Stribley elsewhere.

[smartcode_project:default project_id=102717 project_image_fid=355304]

That sentiment, calm, connection, echoes in the location itself. Kooyongkoot sits just a short stroll from Central Gardens, Fairview Park, and the Rivoli Cinema. Tram lines and schools are close, but the street is tucked, quiet, and leaf-lined.&nbsp;

“Residents of Kooyongkoot will be a short stroll from Fairview Park, Central Gardens, and the Glenferrie Road retail strip," Gacesa notes, "but you're also cocooned in this peaceful pocket behind extensive landscaping by Eckersley Garden Architecture.”

Kooyongkoot is set for completion in late 2026.

[smartcode_project_cta:default project_id=102717]

Staff Writer

The project that said no to compromise: Inside Kooyongkoot, Hawthorn

When long-time Ivanhoe locals Graeme and Catherine, decided it was time to downsize, they weren’t necessarily in a rush.&nbsp;

Like many in their stage of life, they had started thinking about apartment living, but anticipated making the shift in two to three years.

That timeline changed when they visited <a href="https://www.urban.com.au/new-apartments/candela-ivanhoe-40-upper-heidelberg-road-ivanhoe">Candela</a>, a new boutique development by <a href="https://www.urban.com.au/developers/salter-brothers">Salter Brothers</a>. The project ticked all the boxes they were looking for: location, quality design, and long-term lifestyle benefits, which prompted them to bring their decision forward.

“It was the right place at the right time,” they said. “We knew immediately it ticked all the boxes, and we didn’t want to wait.”

[smartcode_project:default project_id=342 project_image_fid=358855]

Their decision to downsize was driven by a combination of practical needs and lifestyle considerations. Their existing home, while much loved, had become increasingly difficult to maintain. It spanned multiple levels, included extensive front and back gardens, and was starting to show the wear that comes with age.&nbsp;

They were looking for a more manageable lifestyle, one with less upkeep and more freedom. A brand-new apartment with no maintenance requirements and the ability to simply “lock up and leave” gave them peace of mind and a greater sense of control over their future.

Financially, the purchase made sense as well. The available stamp duty savings, strong price-to-value offering, and timing of the settlement suited their plans, making the transition smoother and more cost-effective. The apartment's design and inclusions further supported their choice.

[smartcode_project:default project_id=342 project_image_fid=357493]

The layout was both functional and flexible: three bedrooms, a butler’s pantry, a separate laundry, and a large open-plan living area. It gave them the freedom to host a family, accommodate guests, or set up a home office. The expansive balcony and elevated views added to the appeal, providing a sense of openness and connection to the outdoors.

“It just had a really good flow,” Catherine noted, something they found lacking in many other apartments they’d considered, particularly in the established market.

Candela’s boutique scale was another deciding factor. With a smaller number of residences and a top-floor penthouse position, the couple felt the development offered the privacy and space they were looking for, without feeling isolated.

“We liked that it wasn’t a huge development. It felt well-balanced, modern but still with a sense of community, not overwhelming,” they said.

[smartcode_project:default project_id=342 project_image_fid=357508]

Equally important was the ability to remain in Ivanhoe, a suburb they know well and have deep roots in. After 46 years in the area, proximity to local parks, shops, and familiar faces mattered just as much as the apartment itself.

“We didn’t want to give up the community we’ve known for decades. Candela allowed us to upgrade our lifestyle while staying in the place we call home.”

With a Walk Score of 90, the village location supports a convenient, connected lifestyle. <a href="https://www.apartments.com.au/developments/ivanhoe-vic-3079">Ivanhoe</a> Station is just a eight-minute walk away, and the neighbourhood offers access to parks, cafes, restaurants, and schools along Upper Heidelberg Road, all within easy reach.

Beyond the apartment, the couple also saw value in the broader vision for Candela, one that integrates residential living with public spaces and local amenities.&nbsp;

The development introduces 58 new apartments as well as a mix of commercial and social spaces that integrate contemporary architecture with the suburb’s existing character.&nbsp;

At ground level, residents will find a charming café and a lifestyle wellness centre, perfect for unwinding and rejuvenating. Meanwhile, the rooftop garden offers a stunning vantage point for residents to enjoy breathtaking sunsets, host gatherings, or enjoy barbecues with family and friends. It's not just a place to live; it's a vibrant community where every moment is an opportunity to connect and create lasting memories.

[smartcode_project_cta:default project_id=342]

Why Ivanhoe locals are choosing to downsize to Candela

Mark and Roy Makari are expanding their presence in Sydney’s South West with a second major proposal for Leppington, this time envisioning a 900-dwelling mixed-use development just 850 metres from their previously lodged tower trio on Fifth Avenue.

Project management and construction management firm Creative Vision filed the plans for the&nbsp;multi-building project at <a href="https://www.apartments.com.au/new-apartments/230-rickard-road-leppington-nsw-2179">230 Rickard Road, Leppington</a>. The proposal seeks to establish a new focal point for the precinct through a high-density, transit-oriented development supported by diverse land uses.

According to the Scoping Report prepared for the Department of Planning, the scheme includes around 900 apartments across multiple towers, including 135 dwellings designated for affordable housing. A mix of market and subsidised apartments will be supported by ground-level activation through retail and office space, a childcare centre, and a hotel, forming a comprehensive urban precinct.

<img alt="Mixed Use Development 230 Rickard Rd Leppington" data-entity-type="file" data-entity-uuid="34797362-f3dc-4d84-8235-2657fc5f3bde" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Plan.png?VersionId=Uzckrz9tUpDQl5lX1_WMhjnv16bsr8wG" />

The Design Report by <a href="https://www.apartments.com.au/architects/studiosc-0">Studio SC</a> notes that the project “intends to deliver a high-quality, high-density built form that supports the vision for the Leppington Town Centre, integrating mixed-use outcomes and public domain upgrades.” The development is expected to be delivered in stages, although a precise timeline is yet to be confirmed.

The project will be assessed through a future State Significant Development Application, with the Scoping Report indicating the team will seek design excellence via a competitive process or through an expert design review panel. Early massing diagrams suggest a series of mid- to high-rise buildings framing a central landscaped spine, with emphasis on pedestrian permeability and public space.

The planning documentation flags a strong sustainability agenda, stating that the development will “respond to the urban heat island effect, incorporate water sensitive urban design, and prioritise active transport”.

<img alt="Mixed Use Development 230 Rickard Rd Leppington" data-entity-type="file" data-entity-uuid="369d7b54-1279-4cde-88ec-dcb215594414" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Podium_1.png?VersionId=QArL7B2kkLt63vl5xvL0FNV_ardAlez4" />

The proposal follows in the footsteps of the Makaris’ nearby Fifth Avenue site, where they’ve submitted plans for three towers comprising nearly 500 apartments, with 10 per cent dedicated to affordable housing. That project features commercial podiums, a childcare centre, and a new public park that would occupy more than a third of the site.

Both developments are situated within walking distance of Leppington Train Station and fall under strategic precinct plans promoting higher density housing. The town centre is undergoing substantial transformation, driven by state government planning reforms aimed at fast-tracking housing delivery.

Together, the two projects represent a combined ambition of nearly 1,400 new homes across just under two kilometres of central Leppington.

First look: 900-home mixed-use precinct planned for Leppington

Leading Australian integrated property development group, <a href="https://www.apartments.com.au/developers/aqualand-australia">Aqualand</a>, has released the signature penthouses crowning its landmark AURA by Aqualand precinct at 168 Walker Street in North Sydney, unveiling Il Magnate and La Divina as the largest and most luxurious penthouses in the suburb.

With prices anticipated to commence from $15 million, and each accompanied by a new Porsche Carrera 911 valued at over $500K, the residences mark the culmination of <a href="https://www.apartments.com.au/buildings/aura-by-aqualand-north-sydney-168-walker-street-north-sydney-nsw-2060">AURA by Aqualand</a>’s decade-long journey and the beginning of its final sales chapter. 
&nbsp; 
Their release follows more than $850 million in record-breaking residential sales and the building’s completion and occupation.

[smartcode_project:default project_id=30959 project_image_fid=358868]

The Richards Stanisich-designed 284 sqm Il Magnate and 224 sqm La Divina penthouses, collectively known as The Icons of AURA, are conceived as grand luxury homes rather than apartments, with expansive proportions, elevated materiality and curated identities that reflect their status as one-off residences.&nbsp;

Il Magnate features a grande master suite, complete with substantial walk-in dressing area and ensuite, three other bedrooms, second ensuite and another bathroom, powder room, open plan kitchen, scullery, substantial dining area and generous living room divided by a feature fireplace, and a multifunction wintergarden, which is ideal for a study and adjoining office breakout space. &nbsp;

Meanwhile, the La Divina residence offers the same amenities, sans the powder room, on a slightly smaller alternate floor plan configuration.

[smartcode_project:default project_id=30959 project_image_fid=358863]

Each occupies half of AURA by Aqualand’s topmost 28th level, comes with four secure car spaces and pairs sweeping Sydney Harbour panoramas with large-scale living spaces, refined detailing and a level of craftsmanship and amenity rarely offered in the North Shore market.&nbsp;

Penthouse residents will also receive Etymon’s ‘Black Key’ private concierge and lifestyle management service, an invitation only offering providing the ultimate in bespoke personalisation, including a range of everyday discrete services, from dinner party management, grocery deliveries, pet feeding or plants watered, dinners, snacks and coffee deliveries, event ticket sourcing, right up to organising travel visas and international airfares. Rarely seen in Australian properties, the service provides residents the benefits of living in a world-class luxury hotel-style home, akin to The Ritz, or the Waldorf Astoria.

[smartcode_project:default project_id=30959 project_image_fid=358862]

<a href="https://www.apartments.com.au/interior-designers/richards-stanisich">Richards Stanisich</a>’s Director, Kirsten Stanisich, said the studio set out to craft residences that feel profoundly considered, contemporary and deeply connected to their setting.

“From the outset, we approached these penthouses with the sensibility of a grand Parisian residence - generous in scale, elegant in proportion and designed to feel more like a handcrafted home than an apartment," Stanisich said.

“Their elevated position and sweeping harbour outlook informed every decision, creating a rare connection between urban sophistication and natural calm. We shaped each space with expressive materiality, sculptural forms and bespoke detailing that invite touch and interaction.&nbsp;

“The result is a pair of residences defined by volume, light and an inherent softness - refined, flexible and deeply personal. These penthouses are unlike anything else in North Sydney, offering a sanctuary of true luxury framed by some of the city’s most remarkable views.”

For Aqualand’s Head of Sales &amp; Marketing, Alex Adams, the collaboration with Porsche underscores the shared ethos behind the residences.

“Aqualand’s collaboration with Porsche underpins both brand’s sharing an obsession with craftsmanship, design excellence, and enduring value," Adams said.

“Our penthouses are created for those who appreciate the finer details and expect the extraordinary at every touchpoint. Including a Porsche simply extends that experience beyond the residence - it’s a continuation of the lifestyle our buyers already live.”&nbsp;

[smartcode_project:default project_id=30959 project_image_fid=292862]

Aqualand’s Managing Director, Jin Lin, said the penthouses represent both the pinnacle of AURA by Aqualand and an important design benchmark for the company’s future pipeline.&nbsp;

“These stunning penthouses reflect the purest expression of Aqualand’s design ambition," Lin said.

“The unparalleled design intent makes them not only the glistening crown of AURA by Aqualand, but the crown of North Sydney itself. They’re essentially a thank you gift to a burgeoning community that deserves this level of quality and architectural consideration.&nbsp;

“We’re leveraging the unrivalled standard set here as the foundation for what comes next, including our upcoming Anderson Street, Chatswood; 15 Blue Street, North Sydney and Central Barangaroo projects. Purchasers of these penthouses will essentially be living inside the blueprint of Aqualand’s future.

“These landmark residences demonstrate how far North Sydney has evolved and the strength of demand for highly curated, bespoke luxury homes. They’re more than penthouses, they’re legacy residences.&nbsp;

“With AURA by Aqualand now a thriving new precinct with residents well and truly settled, and our in-house world-class lifestyle amenity activated, Il Magnate and La Divina represent a once-in-a-lifetime opportunity to secure an extraordinary piece of North Sydney’s future.”

[smartcode_project_cta:default project_id=30959]

Joel Robinson

Aqualand launches North Sydney penthouses with free Porsche Carrera 911

<a href="https://www.apartments.com.au/developments/bokarina-qld-4575">Bokarina</a> Beach has quietly evolved into one of the Sunshine Coast’s most complete coastal lifestyle precincts, defined not just by proximity to the ocean, but by how residential living, local retail and everyday amenity are stitched together.&nbsp;

Gardner Vaughan Group’s <a href="https://www.apartments.com.au/new-apartments/bask-bokarina-38-bokarina-boulevard-bokarina-qld-4575">Bask Bokarina</a> now represents the final residential chapter in that transformation.

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Over recent years, the Bokarina Beach precinct has taken shape as a walkable, community-oriented neighbourhood, anchored by beachfront access, Lake Kawana to the west, and a growing mix of cafés, specialty retail and public open space.&nbsp;

With Zinc Bokarina already delivered next door by <a href="https://www.apartments.com.au/developers/gardner-vaughan-group">Gardner Vaughan Group</a> (GVG), Bask is the last opportunity to buy a brand new apartment within the precinct, effectively rounding out a fully formed coastal village.

GVG has positioned Bask to strengthen that lifestyle framework. Ten ground-floor retail spaces are planned beneath the residences, extending Bokarina Boulevard’s existing activity and reinforcing the area’s everyday convenience, from casual dining and coffee to local services, within a short walk of the beach.

[smartcode_project:default project_id=141609 project_image_fid=333359]

The residential component comprises 135 apartments across two buildings, Mydas and Caretta, with a clear shift toward larger three- and four-bedroom layouts and penthouses. That mix reflects a maturing buyer profile in Bokarina, where demand is increasingly led by owner-occupiers and active downsizers seeking space, permanence, and connection to place rather than short-term coastal accommodation.

Design and amenity have followed the same logic. Residents will have access to a heated plunge pool, gym, private dining room with a full kitchen, landscaped communal gardens with barbecues and a firepit, and a shared herb and vegetable garden, facilities intended to support daily use rather than resort-style turnover. Pet-friendly features, including a dog wash bay, acknowledge both buyer expectations and the area’s dog-friendly beach, located around 250 metres from the site.

[smartcode_project:default project_id=141609 project_image_fid=333366]

“Bokarina has become one of the Sunshine Coast’s most desirable beachside communities, and Bask represents the very last chance to buy new in this location,” GVG Director Sam Gardner said.&nbsp;

“Our focus has been to create spacious, functional apartments that meet the needs of locals who want to downsize without compromise, as well as those seeking a full-time coastal retreat.”

Positioned between the Pacific Ocean and Lake Kawana, Bask apartments have been oriented to capture outlooks toward the water or the Glass House Mountains, reinforcing the project’s connection to its natural surroundings. With parks, beachfront paths, hospitals, retail and public transport already in place, Bask arrives at a point where the broader precinct is no longer emerging, but established.

Construction is expected to complete in Q3 this year, with apartments ready to move into this Spring.

[smartcode_project_cta:default project_id=141609]

Dan Holden

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