The use of private lenders in the property development sector has surged due to a pullback from the major banks, according to a specialist construction broking group.
HoldenCAPITAL director Daniel Holden says the current regulatory requirements being imposed on the major banks has seen them limit their exposure to construction lending to ensure they maintain appropriate capital reserve exposures.
“Developers and investors cannot rely on their long term lender to provide them with the necessary funding following the recent crackdown by ASIC and APRA,” he said.
“But a wide range of private providers of debt and equity is entering the market or broadening their existing reach and private money has become the ‘new black’ for the construction sector.”
As a result, Holden has also announced that HoldenCAPITAL will be conducting an Asia-Pacific road show in April and May. The roadshows will meet with high net worth private individuals and organisations seeking to invest in commercial property loans and equity opportunities.
“Our executive team will be in Singapore, Hong Kong and Auckland in late April and Sydney and Melbourne in mid-May to discuss these opportunities with investors looking for diversification away from their home markets,” he said.
Through its wholly owned subsidiary, HCAP Invest, HoldenCAPITAL is able to deliver construction finance opportunities with approved lenders for those seeking private funding or approved equity.
HCAP can invest can introduce, assess and manage individual contributory construction mortgage schemes (CCMS) on behalf of approved lenders, says Holden.
“HCAP Invest can provide those lenders with the opportunity to access attractive returns through directly secured construction investments sourced via HoldenCAPITAL,” he said.
According to Holden, HoldenCAPITAL has now grown to become Queensland’s largest construction finance brokerage firm.
“In the 2015 financial year we provided more than $300 million in debt and equity to fund 53 transactions,” Holden said.