Queensland builder-developer MAYD has revealed the first look at its major North Kirra beachfront development, lodging amended plans that reduce the number of apartments and increase the proportion of larger residences.

The project is planned across a substantial 4,742 sqm amalgamated site spanning seven lots at <a href="https://www.apartments.com.au/new-apartments/2-6-pacific-parade-bilinga-qld-4225">2-6 Pacific Parade</a> and 27-33 Golden Four Drive in Bilin​ga, directly opposite Nor​th Kirra Beach.

<a href="https://www.apartments.com.au/developers/mayd-group">MAYD</a> secured the site for $32.5 million in 2025, in what was one of the Gold Coast's largest property transactions of the year.

The development will be delivered across two stages, with the first stage carrying an estimated gross realisation value of around $360 million.

The latest amendments seek to reduce the overall apartment count and shift the project further toward the owner-occupier market, with larger residences designed for buyers wanting considerably more space than traditionally offered in a beachfront apartment.

The residential mix will include townhomes, oversized two-bedroom apartments, substantial three-bedroom residences and four-bedroom homes.

MAYD has appointed Cera Stribley to lead the architecture and interiors, with the Melbourne-based design practice drawing on the beachfront setting through a series of ocean-facing terraces and heavily landscaped balconies.

Strong horizontal forms and curved balconies will define the exterior, with subtropical landscaping integrated throughout the building to soften the built form and increase the connection between the residences and the beachfront.

The project will also include an extensive collection of resident wellness and lifestyle facilities, continuing the broader shift across the Gold Coast's luxury apartment market toward larger homes supported by resort-style amenity.

<img alt="MAYD" data-entity-type="file" data-entity-uuid="d1bcbb05-e659-4b47-8bd4-1e595315e2ad" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%202.05.03%E2%80%AFPM.png?VersionId=jj0XEud1X1DuLt7_KyElhjMdZGOXmLHP" />

MAYD Founder Todd Mould said North Kirra was increasingly appealing to buyers attracted to the more established, lower-density character of the southern Gold Coast.

"North Kirra presents one of the most compelling luxury residential opportunities currently emerging in Australia, combining absolute beachfront with the character and authenticity that buyers are increasingly seeking, and the same sense of tight-knit community that defined Burleigh and Currumbin perhaps 10 or 15 years ago," Mould said.

"With Gold Coast Airport on its doorstep, it also offers a level of accessibility that broadens its appeal across almost every market demographic."

The project comes as the southern Gold Coast continues to attract an increasing share of high-end apartment development and buyer activity.

Kirra in particular has emerged as one of the region's more tightly held beachfront markets, with its relatively low-density character, established surf and hospitality scene and proximity to Gold Coast Airport differentiating it from the higher-density markets further north.

Mould said those characteristics had informed the approach MAYD and Cera Stribley had taken to the project.

"We've worked closely with Cera Stribley to create a vision that is deeply connected to its surroundings," he said.

"Inspired by the coastline itself, the architecture has been shaped around space, privacy and resort-style living, creating a collection of homes that reflects the next generation of luxury on the southern Gold Coast."

MOTIV Managing Director Carly Cottam, who has been appointed to market the project, said buyer attention had continued to move south along the Gold Coast.

"Purchasers who may once have defaulted to Broadbeach, Main Beach or Surfers Paradise are increasingly recognising the value of a genuine beachfront location that offers lower density, strong amenity and a more established sense of community," Cottam said.

"Kirra has a powerful combination of growing demand and genuine scarcity. Beachfront supply is inherently constrained, the area remains relatively low density, and buyers are increasingly placing a premium on locations that feel established, uncrowded and authentic rather than heavily developed."

Cottam said the proximity to Gold Coast Airport was also proving increasingly important for interstate and second-home buyers.

"Being minutes from Gold Coast Airport makes it particularly compelling for interstate buyers, frequent travellers and second-home purchasers who can access an authentic coastal lifestyle almost immediately after stepping off a flight."

The acquisition takes MAYD's active development portfolio to more than $500 million, with the North Kirra project representing one of its largest undertakings to date.

MAYD is targeting an early 2027 launch.

Joel Robinson

First look at MAYD's North Kirra mixed-use precinct

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Castle Hill, the longtime hub of the Hills District, has been one of the major beneficiaries of Sydney's Metro expansion, with improved connectivity helping drive continued population growth, development and buyer demand across the Hills District.

But despite that growth, the suburb has seen relatively few major new apartment projects brought to market over the past 18 months.

Hills District developer Reve Group is looking to fill that gap with <a href="https://www.apartments.com.au/new-apartments/nova-r-ve-castle-hill-2-garthowen-crescent-castle-hill-nsw-2154">Nova Rêve</a>, a major new mixed-use precinct on the corner of Garthowen Crescent and Old Castle Hill Road, a short walk from Castle Hill Metro Station and Castle Towers.

[smartcode_project:default project_id=152737 project_image_fid=377679]

The project will comprise three residential towers alongside a hotel, restaurants, cafes and a skybar, more than 1,600 sqm of ground-floor retail and almost an acre of landscaped gardens.

It represents the largest project undertaken by Reve Group, the development arm of the Kassis family, which has been building across the Hills District for more than 30 years through Kassis Homes.

[smartcode_project:default project_id=152737 project_image_fid=377675]

Nova Rêve also represents a significant step up from the family's first apartment development, Grand Rêve, which was delivered nearby on Garthowen Crescent.

Grand Rêve introduced larger, house-like apartment layouts and premium inclusions including Wolf and Sub-Zero appliances to the Castle Hill market.

Nova Rêve takes that approach to a precinct scale, combining the residential component with hospitality, retail and substantial public and resident landscaping.

[smartcode_project:default project_id=152737 project_image_fid=377685]

Reve Group Managing Director Sam Kassis said the project reflected the family's three decades of building in the Hills, which has evolved from trophy homes on quarter-acre blocks to larger-scale apartment development.

"Grand Rêve was our first apartment project here and it showed us what this pocket of Castle Hill could be. Nova Rêve is the refinement of that idea: not just apartments, but a place the whole suburb can use," Kassis said.

A key part of that approach is the hotel, which has been designed to operate as an amenity for the wider Castle Hill community rather than solely hotel guests.

It will include restaurants, cafes, skybars and all-day dining, alongside conference and event facilities catering to business functions, community groups and private events.

At ground level, more than 1,600 sqm of shops and cafes will open onto the surrounding streets and landscaped areas.

Almost an acre of gardens designed by Land and Form Studios will run through the precinct, incorporating pathways, seating, barbecue areas and children's play spaces.

[smartcode_project:default project_id=152737 project_image_fid=377680]

Reve Group's Romio Georges said creating an active ground plane had been central to the planning of Nova Rêve.

"There are gardens with pathways, barbecues, seating and play areas, shops and cafes opening onto the street, and a hotel with restaurants and a skybar that anyone in Castle Hill can walk into," Georges said.

The project's elevated position on one of Sydney's highest ridgelines will also provide apartments with outlooks toward the Sydney skyline, surrounding parkland and the Blue Mountains.

More than 80 per cent of the apartments will occupy corner positions, with Turner responsible for both the architecture and interiors.

&nbsp;

[smartcode_project_cta:default project_id=152737]

<h3 data-end="3697" data-section-id="q3n5ak" data-start="3672">&nbsp;</h3>
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Nova Rêve arrives as Reve Group bets on Castle Hill's next growth phase

A collection of just 25 large-format apartments and penthouses overlooking Goodwin Park is entering the Coolangatta market, with <a href="https://www.apartments.com.au/new-apartments/marea-residences-coolangatta-27-27a-dixon-street-coolangatta-qld-4225">Maréa Residences</a> combining a low-density, residential-only approach with uninterrupted park and Pacific Ocean outlooks.

Located at 27 Dixon Street, Maréa comprises three and four-bedroom residences alongside a limited number of dual-level penthouses, with the project positioned between Goodwin Park and <a href="https://www.apartments.com.au/developments/coolangatta-qld-4225">Coolangatta</a>’s coastal precinct.

Construction has commenced, with completion currently estimated for late 2027. Three-bedroom residences are priced from $1.8 million.

[smartcode_project:default project_id=150999 project_image_fid=374005]

The project has been designed around its northern outlook across the park, with the building’s architecture, landscaping and material palette intended to establish a connection with the neighbouring green space. The residences have been configured to maximise natural light and views across Goodwin Park towards the ocean.

Inside, the material palette incorporates timber, stone and brushed brass, complemented by curved detailing and ambient lighting. Kitchens and bathrooms carry the same natural material approach, while residences also include basement parking, storage and lift access.

Maréa’s penthouses are arranged over two levels and include private pools, adding another layer to the project’s focus on larger-format apartment living. Across the development, residences are configured with three or four bedrooms rather than the broader mix of smaller apartment types commonly found in larger projects.

[smartcode_project:default project_id=150999 project_image_fid=374010]

Resident amenity is concentrated at rooftop level, where landscaped entertaining terraces and pools take advantage of elevated views across Coolangatta and the Pacific Ocean.

The project has so far been particularly well received by local owner-occupiers and downsizers, according to Urban Activation Property Sales and Marketing Director Matt George, with the residential-only format, construction quality and northern park outlook among the features resonating with purchasers.

“The uninterrupted northern aspect overlooking Goodwin Park has been a key point of difference, with buyers attracted to the sense of serenity and open space the park provides, while still enjoying easy access to the ocean and being within walking distance of the lifestyle and amenities Coolangatta has to offer,” George said.

[smartcode_project:default project_id=150999 project_image_fid=374002]

“The combination of high-quality construction, a residential-only building, park outlook and proximity to the beach has resonated strongly with the local downsizer market.”

The Dixon Street address is within walking distance of Coolangatta Beach and the broader southern Gold Coast coastline, including the surf breaks at Snapper Rocks and Kirra. Coolangatta’s cafés, restaurants and retail are nearby, while Gold Coast Airport is also within close proximity.

[smartcode_project_cta:default project_id=150999]

Maréa Residences brings parkside apartments to Coolangatta

Melbourne developer PDG has secured Victorian Government approval for its $1.5 billion Southbank development <a href="https://www.apartments.com.au/new-apartments/the-one-1-queens-bridge-street-southbank-vic-3006">The One</a>, clearing the way for the long-dormant riverfront site opposite Crown to finally be developed.

The Minister for Planning has approved the project at 1-29 Queens Bridge Street, with the Department of Transport and Planning issuing the planning permit following its assessment.

The approval will allow PDG to develop the prominent 5,059 sqm site with a major mixed-use tower comprising premium apartments, including branded residences, a luxury hotel and boutique office space.

PDG acquired the site in late 2024, with its position directly opposite Crown's main entrance and near Melbourne's Arts Precinct making it one of Southbank's most significant remaining development opportunities.

<img alt="PDG" data-entity-type="file" data-entity-uuid="3933013e-6332-4386-b9be-089df05caf17" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.22%E2%80%AFAM.png?VersionId=sITIgBqDL0N3VNSMwWEmF5UA.uvcsRyu" />

Designed by COX in collaboration with ODO and PDG, the tower's architecture draws on the movement of the Yarra River, with six vertical pleats running the height of the sculpted facade.

The project will also see the heritage-listed Queens Bridge Hotel restored and incorporated into the development&nbsp;with new hospitality and public uses, including a rooftop venue.

A significant component of The One will be its residential amenity.

More than 5,000 sqm of resident facilities will be delivered across a single level, making it one of the largest consolidated residential amenity offerings proposed in an Australian apartment development.

The planning approval also incorporates a major upgrade of Queensbridge Square, which PDG will deliver in partnership with the City of Melbourne.

<img alt="PDG" data-entity-type="file" data-entity-uuid="73167fcd-1031-4b6f-a408-a064cfe45ed1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.17%E2%80%AFAM.png?VersionId=Pf1AEWxw6SNmBqR0zQW5lyEze.MtxgFp" />

The existing square will be revitalised as a new civic and pedestrian space along the Yarra River, strengthening the connection between the project, Southbank and the riverfront.

PDG Founder and Managing Director Vince Giuliano said the approval represented a major milestone for a site which has remained largely underutilised for more than 15 years.

“This is the most significant Planning Permit approval Melbourne has seen in recent years,” Giuliano said.

“For more than 15 years, this site has remained underutilised. This approval enables us to deliver a project that will contribute meaningfully to the revitalisation of Southbank, restore and reactivate an important heritage building, and create a new civic and hospitality destination for Melbourne.”

The latest approval follows an earlier planning permit issued by the City of Melbourne covering demolition works across part of the site at 9-29 Queens Bridge Street. Those demolition and early works are already underway.

PDG has also started generating early interest in the residential component from owner-occupiers ahead of a planned public launch in early 2027.

PDG secures approval for $1.5bn Southbank apartment development, The One

Local developer Harridan is seeking to turn its Woolloongabba apartment project into the first stage of a broader transformation of Burke Street, using a new 16-storey mixed-use building to establish a greener pedestrian connection toward the rapidly evolving Boggo Road transport and knowledge precinct.

The South East Queensland developer has filed plans for 154 apartments on the <a href="https://www.apartments.com.au/new-apartments/4-burke-street-woolloongabba-qld-4102">southern side of Burke Street</a>, where its proposal has been designed alongside a wider vision by LatStudios for the street.

That vision positions the southern side of Burke Street for buildings of 15 storeys and above, while envisaging lower-rise development of up to five storeys on the northern side to transition into Woolloongabba's existing character housing. It also proposes wider pedestrian verges, deep planting, new street trees and upgrades to the pedestrian approach to Boggo Road Station.

The Harridan development itself has been designed by Brisbane-based Arqus Design and will comprise 154 apartments across 16 storeys. The mix is weighted heavily toward two-bedroom apartments, with 121 proposed alongside 10 one-bedroom and 23 three-bedroom residences. There will typically be around 14 units per floor.

A lower-ground car park and three podium levels will accommodate 156 resident parking spaces, along with visitor and commercial parking. There will also be 154 resident bicycle spaces and 40 visitor bicycle parks.

&nbsp;

Harridan is a family-owned developer and part of the Holmwood Highgate Group, with more than three decades of development activity across South East Queensland. Its portfolio spans residential, commercial and industrial property, with current residential projects including Riverbank on Byron in Bulimba, Esperance Residences in Carina and The Precinct at Kinross Road in Thornlands.

Wooloongabba has been popular for apartment developers, particularly since the announcement of the 2032 Summer Olympics games in Brisbane.

While there have been a lot of development applications, it has failed to materialize into real supply.&nbsp;

Sarazin has been the major player in the area. They are under construction at Murcia Residences, on the fringe of East Brisbane and Woolloongabba. They have just launched <a href="https://www.apartments.com.au/new-apartments/the-stanley-residences-woolloongabba-8-trafalgar-street-woolloongabba-qld-4102">The Stanley Residences</a>, in Woolloongabba on Trafalagar Street. They also have Nuage coming soon on the nearby <a href="https://www.apartments.com.au/new-apartments/nuage-woolloongabba-14-wellington-road-woolloongabba-qld-4102">Wellington Road</a>.

First look: Harridan plans Burke Street transformation beside Boggo Road transport hub

Finance

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Small business, often the poor cousin when it comes to securing finance, should look beyond the major bank to kickstart trade or fund their growth, according to the CEO of a specialist lender.
Even though small business accounts for 97 percent of all businesses in Australia, employs 70 percent of the workforce and contributes more than half a trillion dollars to the economy, yet a majority of them fail within the first three years in part due to the difficulties in accessing capital.
It’s a problem that needs fixing, according to Campbell Smyth, CEO Asia Pacific for specialist lender Bluestone Mortgages.
“According to a report by the World Bank and International Finance Corporation, Australia is ranked as the second easiest country to start a business, after New Zealand, and yet more than 60% of small businesses fail within the first three years of operation,” said Smyth.
“Most small and medium sized enterprises say that availability and conditions of credit are key barriers to their business growth.”
According to figures released by APRA, the big four banks are continuing to tighten their mortgage underwriting standards across the board. Figures for small business indicated that the so-called ‘low doc’ loans have declined from 6.4% of new residential loans in 2010 to just over 0.7%, following the introduction of the National Consumer Credit Protection Act in 2009, he added.
“We would be the first to agree that in some cases, and for some lenders, ‘low doc’ loans were based on poor lending practices and the fact that these have been stamped out is a very good thing,” said Smyth. 
“But it may be that the pendulum has swung back too far.”
Smyth said that two thirds (65 percent) of small business owners put themselves in a potentially precarious position by using their personal finance to fund their growth, including credit cards, where interest rates can be over 20 percent.
“And another common approach, using home equity to support a small business, is completely cut off when business operators can’t access a mortgage in the first instance,” he added. 
The problems are compounded for those who have had a previously failed business or a bad credit rating, as in most cases, it results in automatic rejection by a major lender.
In such a situation, it makes sense to look at options outside of the mainstream banks, added Smyth. In fact, non-banks make up a growing segment of the loan market. He said that small business owners should not hesitate to seek help from a specialist lender and/or broker with experience in this area. 
“Ask your broker whether they work regularly with specialist lenders, and make sure you choose a specialist lender with experience. Ask what proportion of self-employed people they lend to, for example,” he said.
“Make sure you question how a loan will be structured, as well as the premium you will be paying above standard interest rates if you have specific circumstances. What it all comes down to is that there are opportunities for the right borrowers even if they don’t meet ideal lending criteria. Being declined by a bank is no reason to give up.”
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Small business should look beyond major banks for finance: Bluestone Mortgages CEO

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<img src="/images/2016/04/27/Holdencapital_banner.jpg" alt="" width="631" height="133">
SPONSORED POST
Post the GFC we saw the major banks consolidate their stranglehold on the Australian construction finance sector however, there are changes afoot which will likely see a major restructuring of the status quo.
As we have previously commented on, the additional capital requirements recently imposed on the Australia’s big 4 Banks in order to ensure their compliance with the ongoing BASEL standards is having a significant effect on the construction finance sector and we believe it’s the beginning of a permanent change in how funding will be both obtained but also who provides it.
These overriding regulatory requirements are not temporary responses to a specific event; they actually represent a permanent constraint on the banks which is impacting both their pricing and the terms and conditions being applied.
We have previously discussed how the need to rebalance their capital allocations has resulted in a need for the banks to reduce their exposure to the sector as construction finance requires a significant level of capital reserve allocation and as such is no longer an overly profitable product from their perspective, hence their reduced appetite.
While there is no doubt that as loans run off their book they will look to replenish, the reduced loan to value ratio’s and other more conservative terms and conditions are permanent changes to bank lending policies which will now fluctuate within certain lower risk parameters. we expect that there will be pricing increases albeit competition will keep that to a reasonable level.
So there is likely to be pressure on the banks to satisfy their client base but remain competitive with the competition which will rise from the second tier banks, specialist funds, private lenders and the like.
This represents a new world order in construction finance and has been clearly demonstrated with all four banks being currently either closed for “new to bank” business or operating with significantly reduced appetite and drastically reduced lending parameters.
Having said this, we don’t expect them to give up their market share without something of a fight once their capital positions allow. One major area they can attack is operational costs and there are two fundamental options open to them.
The first is systems and the second is staffing. With the risk assessment process rapidly becoming automated, we are seeing the banks become more and more reliant on data being input into models using cheaper offshore labour for overnight spread sheeting of financials and with loan approval itself becoming more automated utilising more and more specialised risk models, it is only a matter of time before most transactions are approved based on a simple process of relevant data being entered into the model and then “computer says” Approved! If this sounds like an oversimplification, think about how quickly we all adapted to the home loan process undergoing a similar revolution.
Staff are the single largest cost in this process and there is no doubt the banks are looking to manage those costs to their advantage. The other change we are seeing is a greater reliance on brokers to source deals. Again, if look at the housing mortgage market, current estimates are projecting that 60 percent of all new business will be sourced from brokers by the end of this year following the UK trend where it is estimated to be 75 percent.
In the construction finance sector, it is estimated that 16% of new business is broker generated and this is growing rapidly. We are seeing banks reduce their business development teams and actively courting brokers, effectively reducing staff overheads.
As we recently commented, developers can no longer expect their house bank to provide the necessary funding just because “they have always done it in the past”. They may well have had a sound 30+ year relationship with their bank but this does not guarantee their ability to borrow funds on the same terms that they have been used to.
The risk model will determine this as will their brokers ability to ensure that all the facts, good and less so are properly spelled out become key to a good outcome. For this reason, a professional broker who understands the bank requirements as much as those of his client is a key element in the process.
Today’s developer is now seeing an ever increasing number of options as competitors look to move into competition with the banks and other existing funders. The challenge is identifying which ones best fit both their specific project needs and a readjustment of expectations as to what constitutes an appropriate finance cost when assessing project viability as the cost of these funds is generally between 2-3 percent higher.
The challenge for brokers is that to be successful they need to deliver on both sides of the equation. That is, they need to deliver the best possible outcome for their client while ensuring they deliver a professional presentation to the bank/lender which meets their expectations in terms of detail and accuracy. The trust of both parties is key!
So, just as the housing mortgage market completely restructured with the coming of the wholesale funds and brokerage structures, so we expect to see the construction finance industry undergo a similar metamorphosis, ultimately with similar positive results for the end user. We are already seeing the re-emergence of various second tier banks, investment funds, managed trusts and various private lenders all vying for a share of what will continue to be a growingly sophisticated market.
Brokers now provide Australians with the best way to source cheap and competitive housing loans, so your construction finance broker also holds the key to successfully securing competitive construction funding for your next successful property development.
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 changing face of brokerage and construction finance: HoldenCAPITAL

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ASIC has permanently banned Mr Hardik Bhimani, of Sheidow Park, South Australia, from providing financial services after an investigation found he had misappropriated advice fees owed to his employer, charged his clients excessive fees, and failed to provide a client with statements of advice.
Mr Bhimani was employed in New South Wales as a senior financial planning manager, and later a senior financial planner, with National Australia Bank Limited (NAB) between 1 April 2011 and 4 November 2013. He worked in NAB's financial planning business, NAB Financial Planning.
Between 5 December 2012 and 7 August 2013, ASIC found that Mr Bhimani:
<ul>
<li>engaged in misleading and deceptive conduct by creating and supplying NAB with 'non-standard fee forms' indicating the applicable fees payable by the clients had been waived, and then made arrangements for the clients to deposit the advice fees into his personal NAB bank account;</li>
<li>charged clients excessive fees;</li>
<li>failed to provide a client with statements of advice; and</li>
<li>engaged in repeated breaches of the standards expected of a person in his position.</li>
</ul>
ASIC also found reason to believe that Mr Bhimani was not of good fame and character.
NAB alerted ASIC to Mr Bhimani's conduct and fully refunded the advice fees to the affected clients.
ASIC Deputy Chairman Peter Kell said that ASIC would not tolerate this type of behaviour.
'ASIC will continue to protect consumers by removing those who engage in misleading and deceptive conduct from the industry', he said.
Mr Bhimani has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.
Background
This outcome is a result of ASIC's Wealth Management Project. The Wealth Management Project was established in October 2014 with the objective of lifting standards by major financial advice providers. The Wealth Management Project focuses on the conduct of the largest financial advice firms (NAB, Westpac, CBA, ANZ, AMP and Macquarie).
ASIC's work in the Wealth Management Project covers a number of areas including:
(i) working with the largest financial advice firms to address the identification and remediation of non-compliant advice.
(ii) seeking regulatory outcomes where appropriate against Licensees and advisers.
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ASIC permanently bans former NAB financial planner 

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Lenders are offering large discounts for new business and rebates for new borrowers refinancing with them, according to Alan Hemmings from Oxygen Home Loans.
He recently noted the following examples. 
New business discounts (owner occupied loans with LVR below 80 percent) 
<ul>
<li>St George offered a 1.35 percent discount on new business valued above $500k and 1.45 percent above $1m</li>
<li>Commonwealth Bank of Australia offered a 1.4 percent discount on new business above $750k</li>
<li>Suncorp offered a 1.55 percent discount on new business above $150k</li>
</ul>
Refinancing rebates (T &amp; C apply) 
<ul>
<li>St George is offering a $1,500 rebate for all new refinances valued above $250k</li>
<li>Commonwealth Bank of Australia is offering a $1,500 rebate for all new refinances valued above $250k</li>
</ul>
Alan said every bank has a different process for assessing your application and this is known as your credit score – not to be confused with your credit file:
<ul>
<li>Your credit score is a form of ranking applied to you as a person by a lender. It is based on a range of factors unique to the lender and based on the performance of their loan book. They look at all the attributes of clients who have loans that perform to determine the types of clients they will lend to; and </li>
<li>Your credit file is a long-term record of your financial behaviour, which banks can access to help them calculate your credit score. Have you ever defaulted on a home loan repayment or electricity bill? Bought new furniture on interest-free terms? Applied for a home loan or any other finance? All of this will be on your credit file </li>
</ul>
How your credit score is assessed could mean the difference between application approval and decline; and it will also impact how much money you can borrow, sometimes by tens or even hundreds of thousands of dollars. 
Factors lenders consider to determine your credit score. 
<ul>
<li>Your age </li>
<li>Drivers’ licence – lenders see this as an indication of financial stability </li>
<li>Home phone number – another indication of stability </li>
<li>Number of credit enquiries on your credit file (such as home loan applications that were rejected or approved but not used; as well as purchases on interest-free terms, such as new furniture) </li>
<li>Defaults on your credit file (gas, electricity, council rates, home loan repayments) </li>
<li>Employment – lenders will look at your type of employment (part-time, casual, self-employed, contract or full-time); the industry you work in; and how long you’ve worked for your current employer. If you are full-time in a relatively stable industry and you don’t change jobs every two years, you will score higher than someone who is part-time or has changed jobs frequently </li>
<li>Savings history – lenders will consider how much you’ve saved and over what timeframe. Your ability to save indicates your ability to repay a loan </li>
<li>Other assets – includes cars, furnishings, shares etc. A strong asset base, like a strong savings history, shows you’re not wasting your income and you’re motivated to build wealth</li>
<li>Loan to valuation ratio (LVR) – the lower your LVR, the better your credit score. This ties in to your savings history – the larger your deposit the better</li>
<li>Residential history – lenders want to know whether you’re still living at home, boarding, renting, living in your own property etc. How long you’ve lived there is also an important indicator of stability </li>
</ul>
He said there’s also many crucial differences between lenders in how they calculate your credit score.
Part of your credit score relates to ‘serviceability’ – that is, your ability make your repayments.
This, in addition to your equity in other assets, will determine how much you can borrow. 
<ul>
<li>Examples of differences in how lenders assess your income (or ‘serviceability’) </li>
<li>Rental income – lenders will use 60 percent-80 percent of your rental income. Some lenders will use rental income as determined by a valuation, others will use actual rent receipts</li>
<li>Other mortgage debts – most lenders now apply the benchmark rate to other existing debts, so a rate of 7.5 percent is applied to existing mortgages rather than the 4-5% you’re actually paying now </li>
<li>Credit card debt – lenders will use 2.5 percent-3 percent of your credit limit (not the outstanding balance) to calculate a monthly repayment</li>
<li>Other expenses – any regular ongoing expenses will factor into your serviceability </li>
<li>Bonus Income – lenders will use 80 percent-100 percent of any bonus income</li>
<li>Commission income – lenders will use 80 percent-100 percent of any commission income</li>
<li>Industry allowances – some lenders won’t include allowances at all, others will use 80-100 percent of shift allowances or tool allowances when calculating income</li>
<li>Overtime – lenders will generally use 80 percent of overtime income</li>
</ul>
He said you can imagine what a difference it would make if your chosen lender bases their calculations on 80 percent of your rental income, 100 percent of bonus income and 100% of your allowances compared to say, 60 percent. 
"In order to ensure your loan application is approved for the highest possible borrowings; and to avoid loan rejections which will stay on your credit file for 7 years, you need to choose the lender that will assess you the most favourably when making your next application," he said.
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jchancellor-FAypfDUnLy

Lenders seeking new borrowers with discount offers

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<img src="/images/2016/04/13/Holdencapital_banner.jpg" alt="" width="474" height="100">
SPONSORED POST
When is finance approval reliable? The lender process and terminology demystified.
The current lending market is certainly challenging for property developers, even those that have significant experience and a strong track record with a good project in a desirable location. It can sometimes be even more uncertain when, after lodging an application with a Financier, correspondence is received which appears at least at first glance to appear as a formal offer.
But how reliable is the document?
“Offers” from Lenders can take many different forms and I have outlined a few of these below:
Indicative Offer / Terms Sheet - Typically this will be the first correspondence issued by a Lender in response to a loan application. It will generally set out the Lender’s terms and conditions, including any special conditions and indicative pricing (interest and fees), that the Lender is prepared to consider the transaction on. A Borrower must understand that this does not represent an Unconditional Approval and will typically include a number of disclaimers confirming this. Depending on the Lender’s in-house processes the transaction may or may not have been presented to the internal decision makers. In a tender process, a Lender may issue a Terms Sheet to get a “seat at the table” for the next phase in the loan application process.
The Terms Sheet will often list the additional information required by the Lender to formally consider the loan application. At this point the Lender has no obligation to fund your project.
In recent times HoldenCAPITAL has witnessed first-hand Lenders, including the Major Banks, withdraw or materially change their terms of a Terms Sheet that has been issued. This can be done at the Lender’s absolute discretion and could relate to events unrelated to the Borrower or their project such as global economic changes.
Credit Approved Terms Sheet – Sometimes issued by Lenders, more often by Banks to at least demonstrate that the loan application has been presented to the internal decision makers. Once again, this document does not represent an Unconditional Approval. It merely highlights that the Lender’s internal decision makers have indicated a willingness to consider the proposal on the terms set out to the “front line” team i.e. the person or persons that the Borrower or Broker acting on behalf of a Borrower is dealing with, to issue this Terms Sheet.
Letter of Offer – This is issued as confirmation that the internal decision makers have formally approved your loan application. The Letter of Offer will still include loan conditions that must be satisfied by the Borrower and these will typically be listed as Conditions Precedent (to be satisfied prior to Financial Close and or the first monetary advance) and Conditions Subsequent (to be satisfied by an agreed date or post the first drawdown).
An example of a Condition Precedent for a Construction Facility may be that the Borrower needs to achieve an agreed level of presales to achieve sufficient debt cover for the Lender. Borrowers should be aware that the Lender will still reserve the right to withdraw its offer in the event that it identifies an issue which it considers may be prejudicial to its position if it continued to advance the funds.
Once a Borrower has accepted the Letter of Offer, the Lender will then instruct lawyers, which can either be in-house or external to draft the necessary loan documentation. Only after the Borrower and any Guarantors have executed all loan documentation and all Conditions Precedent are satisfied to the Lender’s satisfaction, will a loan be available for drawdown.   
Lender Processes
The process for a loan application will vary from lender to lender. Banks typically require the loan application to be reviewed by a number of internal parties before an Unconditional Approval is issued. This could include:
<ul>
<li>the Relationship Manager (i.e. the “front line” or the person a Developer first meets to discuss their requirements);</li>
<li>Property Risk – an area of the Bank that forms part of the “Risk” team that is principally charged with assessing the property risks associated with a transaction and the Bank’s entire property loan book. This would usually include instruction and review of valuations, Quantity Surveyor reports in respect of any build cost, a review of Building Contracts and Tri-partite Agreements, concentration risk in terms of asset classes or geographically, assessment of Sponsor, Builder, project, etc.</li>
<li>Credit Risk – The ultimate decision makers who are responsible for assessing the loan application and will take into consideration any recommendations made by Property Risk team. Depending on the risk profile &amp;/or size of the transaction, decisions can sometimes require more than 1 sign off.</li>
</ul>
Non-Banks do not typically have as many layers in the decision making process and may be less demanding in terms of the external consultant reports when compared to the Banks but will normally have some form of Credit Committee charged with the responsibility of reviewing the application and making credit decisions.
The HoldenCAPITAL team has more than 116 years direct property finance experience and have worked for a number of the Major Banks in Australia and are therefore highly qualified to guide property developers through the lending process. Contact one of the HoldenCAPITAL team to assist you with funding your next project.    
 
This article was written by Dan Holden of HoldenCAPITAL, who are a bespoke construction finance firm, they arranged over $300million 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 is finance approval reliable? The lender process and terminology demystified: HoldenCAPITAL

From strength to resilience: APRA chairman Wayne Byres

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GUEST OBSERVER
The Asia-Pacific alternative finance market grew 323 percent to $102.8 billion in 2015, led by four-fold growth to more than $100 billion in China, finds first regional benchmarking report
Survey was conducted by a research team from the Cambridge Centre for Alternative Finance, the Tsinghua University Graduate School at Shenzhen and the University of Sydney Business School, in collaboration with KPMG and with the support of ACCA (the Association of Chartered Certified Accountants) and CME Group Foundation.
The Asia-Pacific online alternative finance market including peer-to-peer lending and crowdfunding grew 323 per cent in 2015 to $102.8 billion, led by a four-fold increase in China to $101.7 billion, according to the first comprehensive study of the Asia-Pacific online alternative finance market.
“The Asia-Pacific online alternative finance market is fluid, diverse, increasingly complex and growing at a rapid pace,” said the report issued today, entitled Harnessing Potential – The 2015 Asia-Pacific Alternative Finance Benchmarking Report.
Outside of China, the rest of the Asia-Pacific region recorded alternative finance volume of $1.12 billion in 2015, up 313% from the $271.9 million raised in 2014. The largest markets in 2015 beyond China were Japan ($360 million), Australia ($348 million), New Zealand ($268 million), South Korea ($41 million) and India and Singapore (each about $40 million).
China is the world’s largest alternative finance market based on the researchers’ global dataset, the report said. While there have been reports on China’s alternative finance market by Chinese companies, this is the first study to benchmark the Chinese market with a set of comparable international standards.
“The Chinese online alternative finance market grew from a relatively low base of $5.56 billion in 2013 to reach $24.30 billion in 2014 and then went on to reach $101.7 billion in 2015,” the report said. Peer-to-peer consumer lending ($52 billion) and peer-to-peer business lending ($40 billion) are by far the largest market segments in China. Reasons cited in the report for the rapid growth of alternative finance in China include the country’s global leadership in Internet user base and smartphone connections, and the fact that alternative finance has “been mostly unrestricted and unchecked” until recent guidelines by regulators.
The alternative finance market includes peer-to-peer consumer and business lending, equity-based and reward-based crowdfunding, and other provision of finance to individuals and businesses through alternative channels via online marketplaces outside of the banking system.
Other key findings of the report included:
<ul>
<li>More than half surveyed platforms in China (with the exception of equity-based crowdfunding) deemed existing regulation to be inadequate or too relaxed, or recognized the need for specific regulation to be introduced. </li>
<li>In per-capita terms, the largest alternative finance markets in Asia-Pacific in 2015 were China ($74.54), New Zealand ($59.37) and Australia ($14.83). </li>
<li>The institutional funding of online alternative finance is notably higher in the wider Asia-Pacific region outside of China, at 63 percent for peer-to-peer consumer lending outside China and 10 per cent in China. </li>
<li>The institutional ownership of alternative finance platforms is far higher for China, at 23 per cent majority interest for banks or other institutional owners compared to 6 per cent in the Asia-Pacific region outside of China. </li>
<li>Outside of China, peer-to-peer business lending has been the largest alternative finance funding segment for three consecutive years, but peer-to-peer consumer lending is the fastest-growing sector with average year-on-year growth rate of 653% between 2013-2015.</li>
<li>The Asia-Pacific region appears to have relatively high rates of female participation in online alternative finance markets, at 33 per cent for peer-to-peer consumer borrowers outside China and 19 per cent in China. </li>
</ul>
The survey involving 20 research partners was based on data from 503 leading alternative finance platforms in 17 Asia-Pacific countries and regions, of which, 376 were from mainland China. The study captured an estimated 70 per cent of the visible market, yielding the estimates contained in the report.
The report described the regulatory environment for alternative finance across the Asia-Pacific region as “diverse and rapidly changing.” While some countries such as Singapore have chosen to regulate alternative finance within pre-existing frameworks, others including New Zealand have created bespoke regulation. And while surveyed platforms in New Zealand and Malaysia generally felt existing regulation is “adequate and appropriate,” platforms in Japan and South Korea were more concerned that regulation is too strict and Chinese platforms generally felt regulation was too lax.
“The opportunities for the world's most populous region to harness the potential of alternative finance for innovation, economic growth, market efficiency, and creativity are abundant,” the report said. “The present challenge is how to best nurture the alternative finance industry, grow the market in a sustainable manner and develop an appropriate and proportionate regulatory regime that strikes the right balance between encouraging financial innovation and protecting the interests of consumers and investors.”
The survey was conducted by an international research team from the Cambridge Centre for Alternative Finance at Cambridge Judge Business School, the Tsinghua University Graduate School at Shenzhen and the University of Sydney Business School, in partnership with KPMG and with the support of ACCA (the Association of Chartered Certified Accountants) and CME Group Foundation.
This article was written by the University of Cambridge Judge Business School. 
To download a full copy of the report, <a href="https://www.jbs.cam.ac.uk/faculty-research/centres/alternative-finance/publications/harnessing-potential/#.VunQeOnvhUE" target="_blank">click here</a>.
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Property 101: Asia-Pacific alternative finance market grew 323 percent in 2015

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<img src="/images/2016/02/16/Holdencapital_banner.jpg" alt="" width="513" height="108">
SPONSORED POST
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>.
</body></html>

Chasing rainbows, overseas funding and other unicorns

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GUEST OBSERVER
ME’s ninth biannual Household Financial Comfort Report shows the gap in financial comfort between younger and older generations has widened significantly since the first survey in 2011.
While the comfort of ‘builders’ (aged 75+) and ‘baby boomers’ (aged 50-74) has improved by 16% to 6.38 and 14% to 5.85, respectively since October 2011, the comfort of ‘Gen Y’ (aged 18-34) and ‘Gen X’ (aged 35-49) has remained broadly unchanged over the same period, up only 2% to 5.56 and 3% to 5.16, respectively.
Digging deeper, the Report indicates ownership of assets including property, superannuation, shares and managed funds, is largely fuelling the divergence.
The recent gains in the macroeconomic and financial environment including significant rises in property and equity values, has disproportionately lifted the financial comfort of older generations who tend to have higher levels of asset ownership or investments.
The findings add to recent policy debates around housing ownership and affordability, and the generosity of superannuation tax concessions for wealthier Australians..
They highlight the importance of housing and superannuation as important wealth generators with both contributing to higher levels of financial comfort. They suggest that wealthier Australians may be better able to manage any windback to super tax concessions, while remaining at a relatively high level of financial comfort.
The disparity in financial comfort between generations is largely due to older generations enjoying substantial improvements in their investments and income primarily through real estate and superannuation.
Gen X and Y have smaller investments and continue to struggle with property ownership, so have benefited to a much lesser extent.
Younger generations are more likely to rent, reflecting the increased difficulty when it comes to getting on the property ladder. He said the issue is exacerbated for the younger generations as prices and rents have grown faster than incomes, particularly in capital cities.
Overall ME’s Household Financial Comfort Index rose 3% to 5.59 out of 10 in the 6 months to December 2015, equivalent to about 65% of Australian households reporting mid-to-high financial comfort. This result reverses half of the fall from the previous 6 months and is the second highest financial comfort result recorded since ME started the survey in late 2011 (about 3% above the historical average of 5.45).
The overall rise in the Household Financial Comfort Index was largely driven by an 8% increase in comfort with ‘ability to cope with a financial emergency (loss of income for 3 months)’, arguably boosted by the strengthening of the labour market and in particular, strong job gains and a significant fall in unemployed persons over the past year or so.
Those stating ‘it would be easy to get a job within two months’ increased 2 points to 40% of the workforce during the six months to December 2015, while those reporting ‘it would be difficult’ decreased 3 points to 53%. J
ob security increased 2 points to 73% and insecurity fell 1 point to 25% (see Report pages 20-21). Modest increases in income also contributed to the improvements in ‘ability to cope with a financial emergency (loss of income for 3 months)’.
The proportion of households reporting annual income gains, increased by 4 points in the past six months to 38%, compared to the proportion who reported lower income, fell 2 points to 24%, with a further 38% reported unchanged household income.
Improved employment and income also contributed to increases in both comfort with cash savings (up 3% to 5.06) and across a range of savings indicators including an increase in the proportion of households saving each month, up 3 points to 50% in December 2015, versus spending all of their income and no more, down 3 points to 41% (see Report pages 25, 27).
Stand-out states:
The effects of a weakening mining industry are showing in WA, the only state where financial comfort deteriorated (down a further 2%) to a record low of 5.11 in December 2015 – the lowest household financial comfort by far across Australia. In contrast, South Australia/Northern Territory recorded the greatest gains in household financial comfort (up 14% to 5.57).
A regional/metro divide remained prevalent, with households living in metropolitan areas reporting higher levels of financial comfort (up 4% to 5.72) in December 2015, compared to households living in regional areas (up 2% to 5.29) in December 2015. Melbourne is the stand-out city, with the highest level of financial comfort (up 4% to 5.92), followed by Sydney (up 3% to 5.81).
On the other hand, Perth fell 8% to 5.12 – the lowest of all capital cities.
Self-employed:
After a very big rise of 18%, self-employed persons (typically, sole proprietors and small business owners) are the most comfortable segment of the workforce reporting financial comfort of 5.91 in December 2015. Recent policy announcements may be a contributing factor – in addition to labour market improvements and some signs of a pick up in business conditions (see Report page 15).
Household differences:
Couples with children – both older and younger in age – reported significant improvements – up 7% to 5.85 and up 6% to 5.55, respectively. In contrast, singles and couples with no children reported the biggest drop. Households were most comfortable with their ability to ‘manage their current living expenses’ (6.52 out of 10) and ‘level of debt’ (6.29 out of 10).
 
Jeff Oughton is ME’s consulting economist and can be contacted <a href="https://www.mebank.com.au/?gclid=CPu_uvLW5soCFQF-vQodaiAF9w" target="_blank">here</a>.
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Financial comfort gap widens between younger, older Australians: ME's Jeff Oughton

<html><body>
<img src="/images/2015/12/16/Holdencapital_banner.jpg" alt="" width="617" height="130">
SPONSORED POST
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>.
</body></html>

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