Non-bank Woodbridge Capital has backed Cremorne, Victoria-based developer Kokoda Property’s newly-completed Malvern Collective project in Melbourne with a residual stock facility for unsold apartments and retail space, underscoring Australians’ growing preference for apartment living as property prices continue to rise nationwide.
Woodbridge declined to state the exact amount of the facility, but said the Malvern Collective is valued at more than $450 million. The high-end project includes two towers housing 205 luxury apartments, with ground-floor shops, cafes and other amenities.
Andrew Torrington, managing director and chief investment officer of Woodbridge, said financing the project fits into the non-bank's strategy of financing "quality assets, credible sponsors and projects in sought-after markets."
Those assets include apartments, which are growing in demand as property prices climb nationwide. With stand-alone homes becoming more expensive, many buyers are turning to smaller living spaces that are affordable.
“We’re seeing a clear and sustained shift toward apartment living as more Australians prioritize location, amenity and lifestyle over standalone homes," Torrington told Australian Broker. "That demand profile reinforces our conviction in supporting high-quality, well-located residential projects."
Belinda Sugars, franchise owner and mortgage broker at Mortgage Choice Parkside, has also seen an uptick in younger people moving into apartments and smaller units to live.
"More than they used to," she told Australian Broker. "People need a home and reality sets in eventually: they're struggling to get into the market. Even if they've saved up a decent amount — $30,000, $40,000, $50,000 — you can't buy a home within an hour or so of the city, at all. And people don't want to live too far out. So it's a unit or an apartment."
So far the evidence of the shift is largely anecdotal. But there are some signs of growing demand for apartments. According to the latest Australian Bureau of Statistics (ABS) Census Report, 70.1% of all private dwellings in 2021 were stand-alone homes, down from 71% in 2016. Meanwhile, flats and apartments in buildings that had at least four stories increased from 5.4% of all dwellings to 7.5%, during the same time period.
Coupled with the ongoing rise in property prices across all dwelling types — especially at the lower end of the market — it makes sense that prospective homeowners are turning to apartment-style units.
Sugars added that the trend is especially evident amid return-to-office mandates and for people whose job doesn't allow them to work remotely.
"Some people do still work in the city and have to be in the city. So they're quite happy to start looking at units to live in as their home," she said.
Construction of the Malvern Collective began in late 2020, with initial costs estimated to be roughly $250 million, nearly half of which was financed by Commonwealth Bank (CBA). Since then, both the price of the project and need for non-bank lenders have surged.
In fact, non-bank lenders are increasingly stepping in to fill the gaps left by traditional banks in Australia's lending sector, offering faster access to credit in an environment where bank turnaround times are slowing due to rising demand.
Commercial brokers can gain an edge by knowing not just the non-bank lenders in the market, but also the range of financing solutions available. Residual stock facilities give developers more funding options.
