2008 was certainly an interesting year and one that will go down in financial history; 50% wiped off the share market, superannuation funds decimated and listed property trusts taken to the brink.
So where will all of this leave us in 2009 and beyond?
We are now in a Catch 22 market, which will make for an interesting year all round in property and development in Australia.
Property
There is an inordinate amount of property on the market nationally, from residential housing and apartment’s right through to large retail and commercial properties and any number of development opportunities across all sectors of the market.
The problem is credit and debt funding. Australian banks no longer have the cash funds and backing they previously had from the larger offshore investors which makes it much more difficult for them to lend causing them to adjust their lending criteria.
We are aware of a recent example where a blue chip client, with AAA rated companies and virtually no debt, was unable to secure debt finance from their banker of more than ten years to develop a commercial office building in which they would have taken more than 50% of the available space. In another development funding application of only $20m, it was suggested that the $20m be syndicated across four lenders at $5m each – unheard of in recent years.
Continue reading →
So where will all of this leave us in 2009 and beyond?
We are now in a Catch 22 market, which will make for an interesting year all round in property and development in Australia.
Property
There is an inordinate amount of property on the market nationally, from residential housing and apartment’s right through to large retail and commercial properties and any number of development opportunities across all sectors of the market.
The problem is credit and debt funding. Australian banks no longer have the cash funds and backing they previously had from the larger offshore investors which makes it much more difficult for them to lend causing them to adjust their lending criteria.
We are aware of a recent example where a blue chip client, with AAA rated companies and virtually no debt, was unable to secure debt finance from their banker of more than ten years to develop a commercial office building in which they would have taken more than 50% of the available space. In another development funding application of only $20m, it was suggested that the $20m be syndicated across four lenders at $5m each – unheard of in recent years.
Continue reading →