Development Funding in Australia
Finding development funding in today’s financial climate is no easy task with many of the lenders who would previously fund such projects have either pulled back severely on all their normal lending or in many cases have simply either stopped lending or gone out of business completely.
There are however still some private lenders that may consider what they consider worthwhile or viable projects but the rates have increased to what passed clients are used to as well as the lending criteria which leaves to immense frustration to developers used to certain terms and conditions.
In the past developers had been able to obtain up to 100% funding for their commercial developments however those deals have long ceased to exist and the general thought is they probably will not return in the near future if ever at all, many developers have had to scale down or even close their companies as the financial crisis deepens.
Banks who one time would look to fund these type of developments for their established development clients simply either do have the appetite for this type of lending or have withdrawn from this market completely, this as you can imagine infuriates their regular clients who believed even in this climate that funds could still be available to them.
Sadly now as well as having to allow for the increase in building costs developers will have to factor in the increased cost of borrowing money and all this on top of a market with falling property prices, to put it mildly great care is needed it is certainly not a market for the “faint hearted” developer.
Having said all the above there are still some private development lenders that will consider stable and viable projects however developers will need to understand that even with base rates being as low as they are the type of funding previously offered does simply not exist any more, developers need to seek the advice of specialists brokers who have contacts and knowledge of how to obtain funding in this financial crisis that is flowing through the world as we speak.
The market today requires careful research and knowledge to identify the development funders that will still consider funding, gone are the days (as already mentioned) of just going back to your usual bank manger because even if he or she wanted to help in many ways their hands are tied as the funds are not there.
I think the key word to the new approach is “Adaptable” we all need to be adaptable both in our acceptance that certain types of development funding no longer exist and that the lenders who may be able to assist can not deliver the type of products that once were freely available, the lenders in turn should appreciate that taking advantage of the current climate and over charging will only bring in short term success.