Developers Post GFC Finance
PROJECT PROFILES Past & Present
EDITION 01 | 2013
What Off-The-Plan Buyers Want!
Welcome to the Marshall White Project Marketing news. As an increasingly strong presence in Melbourne’s new project developments, Marshall White Project Sales are pleased to announce that we will roll out a number of exciting initiatives during early 2013, allowing builders and developers to be kept fully informed of trends in the off the plan apartment and townhouse market, both locally and abroad. Our Developers Newsletter will give specific information on the type, size and price point for the new properties readily selling and more importantly the most cost effective way of effecting sales in a challenging local market. The NAB Quarterly Australian Residential Property Summary (December 2011) should be of significant interest to those marketing product locally with us. The importance of the overseas buyer can’t be ignored. To take full advantage of this emerging trend, we recently represented Marshall White Projects at one of the biggest international property shows of the year, the LPS Beijing Showcase, where projects from Australia, US, Europe and Asia were displayed in Beijing, China last April.
If you would like to discuss the suitability for off shore marketing of a project you may be initiating, then please feel free to call us now. Alternatively if you have any questions regarding project sales or queries regarding the viability of a potential development site then don’t hesitate to call. Good Selling!
Mark Dayman A.R.E.I Director | Project Sales Licensed Estate Agent, Auctioneer 0409 342 462 | 03 8862 4911 mark.dayman@marshallwhite.com.au
Every effort is made to provide accurate and complete information in Marshall White’s (trading as Marshall White Projects) technical and regulatory newsletters. However, Marshall White cannot guarantee that there will be no errors. Marshall White and its contributors to the newsletter make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the contents of the newsletters and expressly disclaims liability for errors and omissions in the contents of this newsletters. Neither does Marshall White and its contributors to the newsletter assume any legal liability for any direct, indirect or any other loss or damage of any kind for the accuracy, completeness, or usefulness of any information, product, or process disclosed herein, and do not represent that use of such information, product, or process would not infringe on privately owned rights.
Development finance for the post GFC developer For the five years to the end of 2007 Australian property developers were spoilt for choice with the simplicity and availability of property development finance. Lenders were aggressively pricing to win deals and presales were not a major precondition or were merely a litmus test to the acceptability of the developer’s price point and market demand rather than the driver of debt clearance upon completion of the project.
concentration risk and deposit type and amount; understanding FIRB restrictions, settlement risk and lender limitations on stock sold to overseas purchasers and takeout of the residual debt upon completion.
Fast forward to 2012 and the lending environment could not be more opposite. Lenders, particularly the major banks, and cash, drive the market. Capital is scarce, lenders are conservative, lending margins have increased, lending approvals take longer and presales are now a crucial prerequisite to pushing forward with any development finance application.
The finance application – There is usually only one opportunity for a development finance application to succeed with any lender and Balmain understands that a comprehensive finance application for the transaction is paramount in achieving a positive outcome. Understanding the rule books of each lender and targeting the loan application at lenders with appetite for that type of transaction is a key component of Balmain’s success.
So how does the modern day developer evolve to this environment? By understanding the key requirements of Lenders such as: Debt vs. Equity – The ability to structure debt facilities and knowing the vagaries of each lender is a key component to underwriting the success of a finance application. Equally important is which cost items will be acknowledged by the lender and also understanding each lender’s lending idiosyncrasies and parameters, including which lenders will accept mezzanine (second mortgage) finance. Ultimately every developer wants to minimise the risk of nasty surprises during a project and one critical component is a successful finance application so the project can start on time – Balmain’s role is to use its lending expertise to assist its clients in securing credit for their project and to communicate realistic outcomes. Presales – Identification of the specific presale requirements of each lender is a key component of any successful development finance application. This includes and is not limited to; understanding what percentage of stock will be required to be sold to trigger construction finance; selecting an appropriate sales agent; knowing what is deemed to be acceptable in terms of contract sunset clauses, sales
Builder – Selection of the right type of builder and understanding the lenders’ requirements of the builder in terms of the financial requirements, references, tripartite agreements, retentions, experience and builder liquidity is key.
For all of your development finance requirements please contact Paul Cleary from Balmain on 0402 010 164 or pcleary@balmain.com.au
ESQUE 4 Willsmere Road Kew Range - $595,000 - $1,485,000 18 Mid Range Apartments Percentage Sold - 50%
GROVE 2A Campbell Grove Hawthorn East Range - $399,000 - $895,000 13 Mid Range Apartments Percentage Sold - 40%
CURRENT PROJECTS
STONINGTON TERRACES 1-21 Somers Avenue Malvern Range - $895,000 - $2,750,000 21 Luxury Townhouses Percentage Sold - 94%
CONSTANCE 428-430 Tooronga Road Hawthorn East Range - $530,000 - $975,000 33 Mid to High End Apartments Percentage Sold - 75%
EVORA 201 Whitehorse Road Balwyn Range - $495,000 - $1,695,000 62 Apartments & 7 Townhouses Percentage Sold - 70%
OUR FOCUS We appreciate there is a lot of information to consider before appointing your project marketer. It is often difficult to financially quantify the difference the choice of a particular agency may make to a project, prior to sales taking place. Our experience tells us that with development work, time equals money. We understand this and so we focus our project team on reaching forecast sales
within the shortest possible time frame, the least amount of stress and with of course the highest possible yield. We would be very please to outline a number of points of difference which in total make a significant difference to the net result for any project.
NORFOLK APARTMENTS 7 Somers Avenue Malvern Range - $650,000 - $2,400,000 33 Luxury Apartments Percentage Sold - 40%
PEARL 88-90 White Street Mordialloc Range - $329,000 - $535,000 32 Mid Range Apartments Percentage Sold - 55%
Introducing the Norfolk Apartments; a new chapter in luxury living, set within the grounds of one of Australia’s landmark properties. Private formal gardens combine with the century old beauty of established Dutch elms, creating a quiet tranquillity beguilingly close to the life and style of Glenferrie Road and High Street. Each apartment offers 2 to 3 bedrooms, 2 to 3 bathrooms & include a minimum 2 car spaces & storage.
EVOKE APARTMENTS 2C Walsh Street Ormond Range - $485,000 - $540,000 12 Mid Range Apartments Percentage Sold - 40% CHURCH STREET 366 Church Street Richmond Range - $399,000 - $695,000 31 Mid Range Apartments
SOLD OUT
CHURCH STREET 136 Church Street Hawthorn Range - $475,000 - $1,050,000 10 Mid Range Apartments
ARGYLE93 93 Argyle Street St Kilda Range - $339,000 - $565,000 24 Mid Range Apartments Percentage Sold - 75%
ER
PAST PROJECT PROFILE
PROJECT
55-59 EARL STREET KEW
No. of Apartments 30
In Kew’s heartland and at the gateway to the city, Peel Apartments consummately responds to the needs of today’s modern lifestyle. At the cutting edge of contemporary urban design, this spectacular development presents an innovative solution to inner urban living. The articulated design utilising time, render and aluminium has created stylish individually distinct residences.
Levels
Conceived around a central leafy courtyard
Builder
CLIENT
ENTSthere are30 predominantly two bedroom
TEAM3
apartments (one 1-bedroom), all single level and accessible by lift.
Residential Project Marketing $450,000 — $815,000
STATISTICS
3% One$18,740,000 bedroom 97% Two bedrooms
NG
Released 06/10
SERVICES PROVIDED
ION Residential
Project Marketing
Prices Range
3
$450,000 - $815,000
GR
$18,740,000
Marketing Status
Release 06/10
Late 2012 55—59 EARL STREET
Completion Date Architect
Website Target Market Results to Date Product 1 Bed 2 Bed
Ascui Edwards
Mancon Projects
INTRODUCTION www.peelapartments.com.au
First home buyers and investors Sold Out
InNo.Kew’s heartland an Avg Size Avg Price m2 gateway city, P 1 55 to the $450,000 29 74 $615,250 consummately respon of today’s modern life cutting edge of conte design, this spectacu
What ‘off the plan’ apartment buyers want – and importantly what they don’t like! Builders and developers need to know a list of the trigger points that accelerate sales. Michael Matusik of Matusik Property Insights commented in a recent article published the 11th of July, compiled from his research of 550 projects:
Buyer feedback is derived from what we display to those people who have expressed an interest in buying apartments ‘off the plan’. Often the most valuable feedback relating to the sales and marketing of a new project is gained from people who did not end up buying;
In order, buyers priorities included:
•
rochures are often too generic – “Could B have been advertising any new apartment project” is a common complaint.
•
ost brochures fail to show the exact M location of the proposed new apartment tower and how it relates to the local area. (Overseas market)
•
eople hate receiving pricing advice that P turns out to be misleading. (Lost leaders)
•
Previously registered buyers expect to receive special offers and do not want to have to enter their bona fides all over again.
•
Illustrations of apartment interiors, colour schemes and display furniture often do not appeal to the (older) target market.
•
itchens and bathrooms seem often to be K designed by men, not women.
•
evelopers generally don’t stress their track D record highly enough.
•
Location
•
Design aspects
•
Security (single women and empty nesters)
•
Onsite management (usually in CBD)
•
Aspect/views; and
•
esident facilities (note impact on Owners’ R Corp. Fees)
In order, buyers concerns included: •
Noise-related issues (main roads)
•
Substandard quality (what’s shown at the display suite)
•
Slow or faulty lifts (usually in CBD)
•
Limited parking (note stackers)
•
Lack of storage; and
•
Poor apartment design
In order of preference, the most important apartment inclusions are: •
Quality air-conditioning
•
Useable balconies
•
Car parking
•
Ample storage; and
•
Wireless technologies
Speak to someone at Marshall White Projects before submitting to town planning, to give your project the best chance of success.
266 Auburn Road Hawthorn 3122 | Fax 8862 4999
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ABN 36 186 546 961
9822 9999 | marshallwhite.com.au
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ACN 071 266 156