There appears to be no shortage of money available to finance new residential property developments, with an Auckland development finance company saying it has plenty of cash available and is looking for new projects to fund.
“Some developers are struggling to get capital, but we have plenty for viable projects,” says James Kellow, a director of New Zealand Mortgages & Securities (NZMS).
The company has a current loan book of about $200 million and had recently received $50 million in repayments from successfully completed projects and was due to receive another $128 million in the near future.
That meant it has around $75 million immediately available and looking for a home.
”We’re ready to fund new projects and remain very confident despite current global circumstances,” Kellow said.
“NZMS directors have been committed to Auckland’s growth for over 40 years, lending through the 1987 share market crash and subsequent recession and more recently the Global Financial Crisis."
NZMS is 40% owned by interests associated with Kellow with the other 60% held by interests associated with Auckland’s Manson family who are one of the country’s leading commercial property developers.
“Many lenders struggled with loan recoveries in the GFC, but these were almost all in provincial areas,” Kellow said.
“It is the critical mass of people living in Auckland that provides depth to the market and ongoing demand for better living environments.
“The residential developers financed by NZMS in recent years have enjoyed significant success in west and south Auckland, primarily with well-designed townhouse projects close to transport hubs,” he said.
NZMS had also financed some Kiwibuild projects.
“Kiwibuild gets a lot of criticism, but without doubt it has given many developers the confidence to get projects off the ground and is getting more people into housing,” Kellow said.
“I would argue that level of support is more important than ever.”
Kellow admitted that NZMS may charge more in interest than banks did for development finance, but the company could often seal deals more quickly than a bank could and NZMS would often require borrowers to contribute less equity than a bank would.
But at the moment it appears that the company has no shortage of money to lend, but is seeking developers with suitable projects to lend it to.
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