An Auckland non-bank property financer says development lending is not close to drying up anytime soon.
New Zealand Mortgages & Securities (NZMS) director James Kellow has said there is no shortage of property finance for commercially viable development projects.
Kellow believes that total finance company lending to the property development market over next year will likely maintain similar levels to those of 2015 and 2016.
NZMS has lent over $133m this calendar year and Kellow said, “All this stuff about finance for residential and commercial developments either being pulled or drying up is completely overblown.
“Some of the projects that have supposedly been pulled were only at the conceptual stage at any rate, and simply had no commercial basis to even make a start.
“Such coverage only makes the likes of apartment buyers overly nervous which is the last thing we need given the housing shortage we have in Auckland. We need to be getting more people into apartments not unnecessarily trying to scare them off!
“Currently our book is pretty strong with approved loan facilities worth $193m in total – up over $30m from where we were this time last year. NZMS is still enjoying some solid lending growth as are our key competitors, so all this talk about a liquidity crisis and lack of available finance is certainly not our clients’ experience.
“What’s more we’ve still got capacity to lend more and we will. Given the relentless development growth we’re still seeing in Auckland and the fact that supply has yet to catch up with demand, we’re certainly anticipating financing even more property developments, and rest assured we’re not alone,” said Kellow.
Although he said there is no shortage of development funding for good commercially viable projects, he warns that all buyers need to know who’s funding a development.
“There’s basically the four leading retail banks and probably four property finance companies in New Zealand that are well capitalised and aren’t going anywhere. Anyone else needs some real due diligence.”
He says Kiwis should find out as much information as they can about the development.
“People are naturally more worried about securing their own mortgage and often overlook how the development itself is being funded and what risks are associated.
“If we’re involved then our proposition is pretty straight forward. At NZMS we’re privately owned and invest our own capital, support some of the largest transactions in the region, and have been doing so since 1983. In this game, being well capitalised and having an exemplary track record and reputation is everything.”
Kellow believes that total finance company lending to the property development market over next year will likely maintain similar levels to those of 2015 and 2016.
NZMS has lent over $133m this calendar year and Kellow said, “All this stuff about finance for residential and commercial developments either being pulled or drying up is completely overblown.
“Some of the projects that have supposedly been pulled were only at the conceptual stage at any rate, and simply had no commercial basis to even make a start.
“Such coverage only makes the likes of apartment buyers overly nervous which is the last thing we need given the housing shortage we have in Auckland. We need to be getting more people into apartments not unnecessarily trying to scare them off!
“Currently our book is pretty strong with approved loan facilities worth $193m in total – up over $30m from where we were this time last year. NZMS is still enjoying some solid lending growth as are our key competitors, so all this talk about a liquidity crisis and lack of available finance is certainly not our clients’ experience.
“What’s more we’ve still got capacity to lend more and we will. Given the relentless development growth we’re still seeing in Auckland and the fact that supply has yet to catch up with demand, we’re certainly anticipating financing even more property developments, and rest assured we’re not alone,” said Kellow.
Although he said there is no shortage of development funding for good commercially viable projects, he warns that all buyers need to know who’s funding a development.
“There’s basically the four leading retail banks and probably four property finance companies in New Zealand that are well capitalised and aren’t going anywhere. Anyone else needs some real due diligence.”
He says Kiwis should find out as much information as they can about the development.
“People are naturally more worried about securing their own mortgage and often overlook how the development itself is being funded and what risks are associated.
“If we’re involved then our proposition is pretty straight forward. At NZMS we’re privately owned and invest our own capital, support some of the largest transactions in the region, and have been doing so since 1983. In this game, being well capitalised and having an exemplary track record and reputation is everything.”
