Commercial

$75m on offer for new developments

Auckland ’s long-term future is sound as well situated residential developments will always sell and demand for affordable housing remains strong, a leading non-bank property financier says.

Tuesday, June 09th 2020

New Zealand Mortgages & Securities (NZMS), which is largely backed by Mansons TCLM, is so confident in the region’s future that it has announced it has $75 million of new lending available to the residential development sector.

NZMS director James Kellow says while some developers are struggling to get capital, they have plenty for viable projects and they expect the quantum of their lending in the next few years to mirror the past few.

“We’ve received $50.3 million in recent repayments from successfully completed projects and have a further $127.5 million due in from projects near completion. This means we’re ready to fund new projects and remain very confident despite current global circumstances.”

With a lending book of about $200 million, he says NZMS is well positioned to deal with any economic fall-out resulting from the global Covid-19 pandemic.

Kellow says they have lent through the 1987 share market crash and recession and, more recently, the GFC but it was through the GFC they really experienced the resilience of the Auckland property market.

“I was processing loans and meeting with developers right through that period, finishing projects, then starting greenfield subdivisions. As the market improved, it was apartments and townhouses. Many of our clients are counter-cyclical, so when the weaker developers stop - they grow their delivery.”

Auckland’s growth and scale gives them the confidence to lend again despite much wider economic uncertainty.

“Many lenders struggled with loan recoveries in GFC, but these were almost all in provincial areas,” he says. “It is the critical mass of people living in Auckland that provides depth to the market and ongoing demand for better living environments.”

It seems that affordable housing demand remains high – due to high numbers of Auckland buyers wanting to take advantage of record-low interest rates and the removal of the LVR restrictions (which mean lower deposit are possible).

Kellow says they get a particular kick out of providing funding to projects for first-home buyers and are proud of the fact that the developments they have done with KiwiBuild to date have been matched with first-home buyers prior to completion.

That’s why NZMS has given KiwiBuild an undertaking that they will provide approvals on any project KiwiBuild is underwriting within 24 hours of receiving all the high-level information.

“KiwiBuild gets a lot of criticism, but it has given many developers the confidence to get projects off the ground and is getting more people into housing. I would argue that level of support is more important than ever.”

Success with developments is all about backing picking project winners, Kellow says.

“We put our resources, connections, expertise and financial clout behind a developer who has desire, drive, and vision. We love supporting small scale developers into much larger projects than they could otherwise have imagined.”

While they do set a pretty high bar to becoming an NZMS borrower, once on the team their clients become friends, he adds. “We get a huge kick out of not just building homes but creating new communities and shaping Auckland’s future. In that regard, nothing has changed in 2020.”

Comments

No comments yet

Heartland Bank - Online 1.99
Kainga Ora - First Home Buyer Special 2.25
HSBC Premier 2.25
ICBC 2.45
Westpac Special 2.49
SBS Bank Special 2.49
The Co-operative Bank - Owner Occ 2.49
BNZ - Classic 2.49
ASB Bank 2.49
ANZ Special 2.49
TSB Special 2.49
HSBC Premier 2.35
Heartland Bank - Online 2.35
ICBC 2.45
TSB Special 2.49
ASB Bank 2.59
SBS Bank Special 2.65
Kiwibank Special 2.65
China Construction Bank Special 2.65
The Co-operative Bank - Owner Occ 2.69
AIA 2.69
Westpac Special 2.69
HSBC Premier 2.89
SBS Bank Special 2.99
The Co-operative Bank - Owner Occ 2.99
AIA 2.99
Westpac Special 2.99
BNZ - Classic 2.99
ICBC 2.99
ASB Bank 2.99
China Construction Bank Special 2.99
Kiwibank Special 3.19
TSB Special 3.19
Heartland Bank - Online 2.50
Resimac 3.39
Kiwibank - Offset 3.40
Kiwibank 3.40
Kiwibank Special 3.40
Bluestone 3.49
ICBC 3.69
Heartland 3.95
The Co-operative Bank - Owner Occ 4.40
The Co-operative Bank - Standard 4.40
Kainga Ora 4.43

More Stories

Just 14 days until new healthy homes standards kick in

Tuesday, November 17th 2020

Just 14 days until new healthy homes standards kick in

It is just two weeks now until healthy homes standards compliance statement need to be included in new or renewed tenancy agreements.

Reserve Bank looks to bring back lending restrictions

Wednesday, November 11th 2020

Reserve Bank looks to bring back lending restrictions

The Reserve Bank plans to reintroduce loan to value ratio restrictions on mortgage borrowers from March next year following a surge in the housing market.

Tribunal divvies up blame in maintenance ruling

Friday, November 06th 2020

Tribunal divvies up blame in maintenance ruling

New Zealand’s aging housing stock and tradition of informal landlord-tenant relationships have the potential for complex disputes where fault lies with both parties – as illustrated by a recent Tenancy Tribunal ruling.

COMMENT: The importance of correct structuring

Thursday, November 05th 2020

COMMENT: The importance of correct structuring

Structuring the ownership of a property portfolio is rarely the first – or even the second - thought for new investors. But it should be, argues property accountant Anthony Appleton-Tattersall*.