Overview of Property Development Lenders in Australia

Key Takeaway Table

Aspect	Key Takeaway
Non-Bank Funding	Trend of alternative financing options outside traditional banks including Private Lenders.
Specialised Lenders	Lenders that specialise in property development can produce term sheets within 24 hours and fund faster than commercial banks.
Financing Solutions	A diverse range of solutions caters to different financial needs and project scales.
Accessibility	Services available for both experienced and first-time property developers.

Talk To An Expert To Finance Your Next Property Development

Securing the right financing partner for your property development is as crucial to your project success as finding the perfect location. The landscape of property development lenders has evolved significantly over the last two decades in Australia, with traditional banking institutions no longer being the only option or, in many cases, not even a preferred option. This article provides an overview to the various facets of property development lenders in Australia, highlighting the trends to provide insight to the various property development lender solutions available to both first time and experienced developers.

The Rise of Non-Bank Property Development Lenders

The Australian property development sector has witnessed a significant shift with the rise of non-bank lenders. These entities offer an alternative to traditional banking, often deliberately filling policy niches left vacant by the major banks. Non-bank lenders have become particularly appealing to property developers due to their ability to look at a project with significant commercial acumen and provide fast responses with indicative term sheets and high levels of engagement.

Advantages:

Flexibility: Non-bank lenders often provide more flexible terms and conditions compared to traditional banks.
Speed: They are typically able to process loans faster, which is crucial in a property market where profitable opportunities do not last long.
Innovative Solutions: Non-bank lenders are known for their commercial approach to transactions and assessing the risk of a project. It is not uncommon for a non-bank lender to tailor loan conditions to match the specific attributes of a project.

Considerations:

Interest Rates: While offering flexibility, non-bank loans can come with higher interest rates. This is often the case when refinancing distressed developments or when seeking a term extension - the rate will reflect the perceived risk of the project.
Reputation and Reliability: It's essential to research and choose a lender with a proven track record of funding the type and size project you’re seeking to undertake.

Expertise in Property Development

Working with a property development lender who specialises in funding development projects makes a massive difference to your overall experience. Lenders with specialised knowledge in property development funding and construction finance play a pivotal role in your project being funded quickly and managed in a manner that gives you confidence.

Key Aspects of Expertise:

Market Knowledge: Being quick to communicate which locations, property types, and developer profiles meet their lending appetite.
Risk Management: Expertise in identifying potential risks in development projects and setting conditions to mitigate risks to the successful completion of your development project.
Project Feasibility Analysis: Lenders with in-depth knowledge can accurately assess the viability of a project and provide quick responses with certainty, including indicative term sheets that can sometimes be provided in hours.

Different Property Development Lenders Have Different Specialties

Australian Property Development Lenders offer a wide array of financing options, catering to a range of projects, from small residential property development projects like a 3 on 1 townhouse build to large-scale commercial property developments and everything in between. To choose the right property development lender for your project it’s important to match with a lender who has a proven track record of successfully funding your type of development through to completion.

Different Types of Solutions Offered By Property Development Lenders:

Land Acquisition Loans:

For purchasing land for future development.

Construction Loans:

Providing construction finance, specifically designed for covering construction costs.

Mezzanine Financing:

A hybrid of debt and equity financing, often used to fill a funding gap.

Bridging Loans:

Short-term loans, which can sometimes be an unsecured loan, used until permanent financing is secured.

Each type of property development loan comes with its own set of terms, interest rates, and repayment structures.

Catering to All Levels of Experience

Australian property development finance lenders can cater to different skillsets and developers of varying experience. Some in the private sector will only wish to work with experienced developers or those with strong personal balance sheets but this shouldn’t deter first time developers from seeking finance for their property development. A lack of experience can be mitigated by working with an experienced builder, sufficient equity in the project or even obtaining presales.

Partner with darkhorsefinancial.com.au for your Next Property Development

From the rise of non-bank lenders to the focus on larger developments being completed outside of the major banks, property development lenders have evolved to meet the diverse demands of the property market and the number of property development professionals. Whether you're a first-time developer or a seasoned professional, matching with the right lender and finance partner is key to the success of your project. To talk to an expert for your project contact us here.