Non-bank lenders triggering apartment project restarts across Melbourne

Non-bank funders are looking to lend to apartment developers whose project starts were stalled across Melbourne during the pandemic. "We are seeing the savvy developers doing what they can now to get their projects moving," Wingate managing director (property) Mark Harrison told Nine Entertainment. But Harrison confirmed "a real distinction" between investor and owner-occupied product. "The owner-occupier market is quite strong and we are funding quite a bit through the middle and inner-ring suburbs, driven by downsizers and people making lifestyle choices." The big banks are mostly absent from the market, given their policies on pre-sales. Pallas Capital chief investment officer Dan Gallen noted the banks often still had a requirement for onerously high levels of pre-sales. "The banks have not moved with the times," Mr Gallen said. "Developers are left in purgatory," he added. Pallas Capital has extended $700 million of apartments across the major capital cities over the last three years, mostly via first mortgages, targeting upmarket developments in suburbs Malvern and Brighton in Melbourne. "The market is certainly there, especially in the owner-occupier space," Mr Gallen said. "We have had $150 million of loans repaid in the last three months from developers able to sell product." The article noted MaxCap Group founder Brae Sokolski indicating its client developers were taking a position on the demand picture in 2022 and 2023. "If net migration returns, we feel there will be a chronic housing shortage that will work in favour of developers with completed projects." Sokolski noted funding conditions were especially working in favour of inner-city boutique developments, led by owner-occupiers. MaxCap is backing the $45 million One Wilson Avenue project in Brunswick, consisting of 41 apartments being developed by Neometro and Milieu.