MAXCAP Group has arranged construction funding for 20-storey residential towers in Melbourne and Brisbane, taking its commitment to projects during the pandemic to circa $1.5 billion as non-bank lenders increase their market share.
Among the latest projects are the $120 million mixed use Park Ave development in South Melbourne, which will comprise 160 apartments with a mix of one, two and three-bedrooms and two retail units.
“We believe there is significant opportunity in this part of Melbourne with Park Ave designed to cater for young professionals, downsizers and sophisticated investors,” MaxCap co-founder Brae Sokolski said.
“Notably, Park Ave is very well located within an established mixed-use precinct offering direct access to public transport, entertainment precincts, leisure activities, and well-regarded schools. The development also features amenities including a wellness centre, gymnasium, sauna and concierge.”
Milbex Group is a Melbourne based private developer with a portfolio of projects that includes several high-density residential towers across Melbourne.
“These are clearly interesting and challenging times in the market,” Michael Vil, founder and director of Milbex said.
Sokolski highlighted the growing popularity of South Melbourne as an established and highly sought-after inner-city suburb. Park Ave, located at 39 Park Ave, has pre-sold 60% of its stock.
MaxCap has also committed a $90 million facility for Kokoda Property Group’s Milton development The Ambrose, that will have 181 apartments. Kokoda last month secured a $110 million construction loan from Commonwealth Bank of Australia for another project in Melbourne’s inner suburb of Malvern.
MaxCap last month closed funding for private developer Blue Earth Group’s Ivanhoe Gardens residential project, which will have an end value of $140 million, and which quickly followed its funding of a boutique apartment development in Perth’s Jolimont.
In August, it tipped in $170 million for a 396 apartment project in Melbourne’s Box Hill, after committing to funding the construction of a smaller project in the inner suburbs.
MORE than 70% of lenders are looking to increase their loan books, although tighter conditions are on the cards, as non-banks move to grow their presence in the real estate debt market.
A recent survey of lenders by Stamford Capital showed non-banks have furthered their presence in the real estate debt market. Non-banks are expected to outpace major banks for investment loans, and while there was less optimism for construction lending non-banks showed a greater hunger at 68%, compared to 57% of major banks expecting to maintain or increase.
Reduced risk profiles, growing caution and continued uncertainty have put a spotlight on pre-sales. About 60% of all lenders surveyed require 60 to 100% in pre-sales, with 17% expecting this to increase further in the next six to 12 months. A sizable 93% of major and second-tier banks require 60 to 100% in pre-sales, leaving the non-banking sector to step in and underwrite developments with limited pre-sales.
Half of non-banks surveyed require no pre-sales at all, although 25% plan to increase this in the next six to 12 months. Last year, 34% of non-banks in the survey required no pre-sales, and this has jumped to 50% this year.