Property
development and construction finances are becoming more popular in
Australia than ever. Many property developers are choosing these
loans to build their new projects. Based on their project
construction and development requirements, developers can choose
different types of development/construction finance options in
Australia.
In
Australia, some of the popular development funding-options are No Pre
Sale Construction Finance, Mezzanine Finance, Joint Venture Funding,
Land Subdivision Loans, and Property
Refurbishment Solutions. Here, we will briefly discuss some of
popular financing options for commercial, industrial, retail and
residential construction projects.
- Mezzanine Finance
It is used
by property developers to maximize their borrowing capacity against a
specific project development. This type of property development finance provides a “bridge” between the
borrower’s equity and senior debt.
- Joint Venture Funding
Typically
lenders will only fund senior debt up to 80% of the cost of the
property. If developers require more capital, they can consider other
options such as joint venture funding. Joint venture funding is
provided by private lenders in Australia across the office, retail,
industrial and residential sectors.
- No Pre Sale Construction Finance
Finances and
an acceptable level of pre-sales are one of the minimum requirements
for the funding of property development projects, traditionally.
Private funded low doc construction finance has been considered as an
attractive alternative.
It provides
developers with option to avail finance with minimum or no pre-sales.
This type of development finance
is ideal for real estate sectors where the value of the property is
growing at decent pace. Developers can achieve capital growth on
their properties, by selling the units at completion.
- Land Subdivision Loans
These
finances are specially designed for assisting property developers in
subdividing property projects into much smaller allotments for sale.
Lenders assist developers in acquiring the land to fund the
engineering and infrastructure works, which consists of road works,
sewage, electricity, etc.
Additionally,
lenders help developers to refinance their completed projects. Based
on their finance needs, developers can avail land subdivision in
either full doc (cost-based) or low doc (GRV-based) format from
well-known and reputed private investors or lenders.
- Property Refurbishment Solutions
Property
refurbishment finances are ideal for property developers who are
looking to purchase an existing building and then refurbish it to a
modern level, which adds significant value to it. It is suitable for
all existing properties including retail, residential, office and
commercial.
