Over the last 12-18 months, a range of factors have emerged that are shaping the direction of property development financing.
We have strong house price growth in Auckland driven by a gap in supply – the latest Real Estate Institute of New Zealand (REINZ) Property Report shows Auckland median house prices rising 28% over the year. Auckland’s Unitary Plan is striving to deliver greater intensification in suburban centres and along key public transport corridors. Record numbers of building consents are being issued.
“Developers that are keen to make the most of these market conditions are actively seeking finance solutions that can help them get projects started quickly, with certainty of support through the lifecycle of the development,” says Versa Finance Senior Manager, Dan Bolstad.
While a lot has been said about the difficulties in obtaining development finance as a result of tighter banking regulations, less mentioned is the shift in some traditional bank customers using non-bank financing to maximise their capital and make the most of current market conditions.
“A significant amount of capital can be required to carry out a single development and given current market conditions this may not be the most efficient and risk considered use of that capital - why have up to 30% equity in a townhouse development when that can be spread across a number of developments generating greater returns”.
Versa can fund up to 100% of costs.
We want to support developers in making the most of the current market opportunities and see them grow.
This trend of traditional bank customers using non-bank financing is only going to continue and grow - “From our perspective, the need for quality, efficient financing to support housing development in Auckland will continue for some time. It’s a crucial cog in the wheel for enabling the delivery of housing supply to catch up with demand”.
We are always available to help developers understand how non-bank financing can support their goals.