Property Development Advisory Services

Prudential Finance’s Director Brett Collins heads our property development advisory services with 30 years of property development and finance experience.  Brett completed many successful property developments in the exclusive Eastern Suburbs of Sydney Australia.

property development advisory services

Diverse experience in property development; renovation of blocks of apartments, Hotel conversion to apartments, building brand new town homes and luxury apartments.

Expert in Company Title, Strata Title and Torrens Title property developments.

We can assist you from development site feasibility, raw site acquisition, finance, development application, approval, management, marketing advice, property development problem solving.

Personalised property development mentoring is available for people new to property development and wish to learn the profession of real estate development.

property development advisory services

 

 

 

 

 

See our Director speak about property investment click video

Call 1300 550 669 to discuss your property development project.

Finance Consultants Perth Western Australia

Finance Consultants Perth Western Australia

Prudential Finance is seeking finance consultants Perth Western Australia to head up Prudential Finance’s new Perth office to service Western Australia.

This exciting role for experienced development finance, construction finance and private funding professionals to work within the Prudential Finance brand, established 15 years in Sydney.

finance consultants perth western australia

Providing unparalleled knowledge, support and marketing expertise to enable the successful applicants to penetrate and capture market share.

A generous fee based renumeration package will be offered to successful candidates, ensuring high achievers will prosper financially.

Call Prudential Finance today 1300 550 669 and discuss this exciting new opportunity for finance consultants.

For more information about Prudential Finance go to About Us

 

Australian Real Estate Yields

Australian Real Estate Yields

Residential, Commercial, Industrial and Retail across Sydney, Melbourne, and Brisbane.

Australian Real Estate Yields

Australian Real Estate Yields

  • Sydney continues to perform in a balanced manner. Further supply expected for apartments. Overall rental market remains resilient with vacancy rates at the lows. Any pressure on growth or reduced demand for housing offset by further infrastructure investment scheduled.
  • Melbourne’s momentum is impressive. Population growth continues to drive new investment. 2017 House price growth surpassed Sydney. Similar to Sydney Vacancy rates continue to compress. Supply will continue to grow over first half of the year. Plenty of activity in Melbourne’s real estate market.
  • Brisbane market is operating with a stable tone. Similar with Sydney its expected to see a robust amount infrastructure investment that can offset any weakness in the housing market. Supply has been reduced as we have seen a vast amount of apartments built over last few years and the market is searching for the ideal supply/demand equilibrium point.

Australian Real Estate Yields

  • Sydney yields continue to tighten with supply remaining low. Strong rental growth is a trend that will continue. Overseas demand remains strong and its expected to gather pace this pace.
  • Melbourne forecasted rents are due to increase and remain well supported. Continued demand from domestic and overseas investors with supply unable to meet demand has seen further compression in yields.
  • Brisbane Vacancy rates are seen to increase modestly this year. Similar to Sydney and Melbourne prime office supply has been thin. Further overseas demand seen for high quality assets with strong tenants.

Australian Real Estate Yields

  • Sydney supply is low on a historical basis. There continues to be a need for larger size transactions. This creating an attraction for portfolio type opportunities. Infrastructure investment to drive higher valuations.
  • Melbourne’s industrial construction levels are at a healthy level. Robust tenant demand continues to drive growth. Similar need for larger size investment opportunities is desired from domestic and overseas investors.
  • Brisbane’s yield compression has been a common theme. Rental growth has been strong. Supply remains thin with similar demand from domestic and overseas investors.

Australian Real Estate Yields

  • Sydney CBD Rents are at shockingly high levels. Development will be robust over the coming years. Yields have been somewhat resilient. Further superannuation and pension fund interest expected.
  • Melbourne’s CBD rents seeing consistent growth with population boom being the driving force. Yields have been stable and expected to compress with investor demand for re-development to remain robust.
  • Brisbane CBD leasing market remains volatile. Overall turnover has been less frequent for areas outside CBD. Further development will be closely watched by the market while investors take a cautious stance.

J.O.

Disclaimer

“Prudential Finance recommends that investors consider their own objectives, financial situation and needs before proceeding with any investment and seek professional advice. All information contained within this Website is specifically structured for corporate, business, commercial, construction clients, wholesale and professional investors.”

 

 

 

 

 

Melbournes New Suburbs

Melbournes New Suburbs

100,000 lots created by end 2018 with view of creating new affordable housing which is desperately required.

Treasurer Tim Pallas said the release of housing lots would help “make housing more affordable”.

“This increase in supply is also a boost to the construction industry, creating jobs in the growth corridors, as well as in established suburbs,” he said.

Melbournes-new-suburbs

New Suburbs:

  • North of Melbourne: Lindum Vale, Beveridge North West, Beveridge Central, Donnybrook and Woodstock, Wollert, Northern Quarries
  • North-west of Melbourne: Lancefield Rd Sunbury, Sunbury South
  • South-east of Melbourne: Minta Farm, Pakenham East, McPherson
  • West of Melbourne: Quandong, Tarneit Plains, Kororoit, Mt Atkinson, Plumpton

The required Construction of housing for new suburbs is a developer’s dream indeed but at a cost. Growth Areas Infrastructure Contribution (GAIC) estimated to be $115m for just Donnybrook and Woodstock across Melbourne’s North.

Despite the forecasted lower growth expectation for Melbourne Property Market in 2018 we continue to see a strong amount of interest seeking debt and equity opportunities within the Melbourne real estate market.

For Prudential Finance Melbourne continues to be active region with at least one out of three funding enquires we receive will be for a Melbourne project. Current level of enquiries thus far this year from Melbourne Development companies is up over 75% vs previous year.

J.O.

Development Application Changes NSW

Development Application Changes NSW

Some important changes that you should be up to speed across Staged and Concept Stage Development Applications. These changes detailed below has implications for any Developers and any related parties/Stakeholders of large scale projects who have pending, or proposed, applications for concept proposals in NSW.

development application changes nsw

Key changes

  • Staged Development Applications will be renamed Concept Development Applications, to better reflect what they contain in practice,
  • A Concept Development Application will be able to be followed by only ONE development application for the site, rather than the multiple applications currently required, and
  • A new provision (section 83B(5)) will make it clear that the impacts of carrying out the development may be considered when the concept proposals are being assessed, but must be considered where approval to carry out works is sought.

 Reasons for the changes

“The Government proposes to amend the legislation, so it is explicitly clear that staged development applications can include only a concept approval and a single subsequent detailed application. Construction impacts will be fully assessed before any work can start.

“This two-stage approach has become common practice in the development industry. The Government is simply making the legislation clearer to ensure the current pipeline of DAs worth $8 billion can proceed without delay.

“Staged DAs tend to be for larger, more complex projects. A concept approval makes it clear what the high-level planning limits are for a development, including its use, shape and scale, and height which provides certainty to developers, financial backers, stakeholders, and the community.

“Having multiple DAs when one would suffice would create time delays and additional costs to the applicant, with no commercial, technical or community benefit.”

What’s the impact of these changes?

The Decision will terminate single stage concept DAs, and will mean that all concept DA’s need more detailed assessment of Construction Impacts for all stages of the development proposal at the Front End. This could potentially add further costs and time to the concept DA process.

Further information can be obtained from NSW Planning and Environment website below and or speak with your Planning Lawyer.

http://www.planning.nsw.gov.au/Policy-and-Legislation/Under-review-and-new-Policy-and-Legislation/Legislative-amendment-for-concept-proposals

James Okkerse

Disclaimer

“Prudential Finance are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories. Prudential Finance does not provide financial product advice and does not hold an Australian Financial Services Licence. Prudential Finance recommends that investors consider their own objectives, financial situation and needs before proceeding with any investment and seek professional advice. All information contained within this Website is specifically structured for corporate, business, commercial, construction clients, wholesale and professional investors.”

 

 

 

 

 

Dwelling Supply across Eastern Seaboard of Australia

Dwelling Supply across Eastern Seaboard of Australia

We thought it would be useful to illustrate dwelling supply across eastern seaboard of Australia, where dwelling supply is forecasted for NSW, VIC, QLD ACT and TAS. Each state has its own technicals (population growth, overseas migration, building approvals, for example) but it’s fair to say that there is a healthy level of Supply that the market will be eager to see how this is absorbed.

It will be interesting to closely monitor what effect excess supply along with potential increases in interest rates will have on the Australia’s House Price Growth. No doubt an increased amount of Volatility will be expected over next 12-18 months.

Dwelling Supply across Eastern Seaboard of Australia

Insolvency Legislation Reforms – Safe Harbour & Ipso Facto

Insolvency Legislation Reforms – Safe Harbour & Ipso Facto

Key Legislation changes have been introduced whereby ‘’safe harbour’’ protects company directors from personal liability for financially distressed/insolvent trading companies

Insolvency Legislation Reforms - Safe Harbour & Ipso Facto

Directors are to ensure they have developed a course of action which are reasonably likely to lead to a better outcome for the company and its creditors rather than triggering immediate administration or liquidation.

There is also another layer of legislation which prevents contractors terminating supply and other contracts with the business during the restructuring period, under what are called “ipso facto” clauses.

The objective for the reforms are to encourage company directors to engage early with financial hardship, keep control of their companies and take reasonable steps to pursue a corporate restructure.

It’s also intended to provide a better opportunity for companies to restructure and trade through financial difficulties, when they may have otherwise entered into liquidation or external administration.

Feel free to call us where we can run you through what type of Credit Impaired Loans / Debt Solutions we can offer.

Further Information on Safe Harbour and Ipso can be found on Australian Government legislation link below.

Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Act 2017

https://www.legislation.gov.au/Details/C2017A00112

J.O.

“Prudential Finance does not provide financial product advice and does not hold an Australian Financial Services Licence. Prudential Finance recommends that investors consider their own objectives, financial situation and needs before proceeding with any investment and seek professional advice. All information contained within this Website is specifically structured for corporate, business, commercial, construction clients, wholesale and professional investors.”

 

 

 

Historical Cash Rates & Median House Prices

Historical Cash Rates & Median House Prices

We are living in a very interesting world, where I’m sure in 20 years’ time the ‘’experts’’ will be either saying how good we had it or what on earth where we thinking.

We believe that despite current asset values, yields, supply etc, etc we have tremendous Opportunity within Debt and Equity side of Real Estate Market in both an upward/downward scenario if your pragmatic and have a strategy in place for any change in landscape.

What can be challenging is looking at current asset prices vs historical basis for relative value purposes, everything appears expensive. I think the next phase of opportunity will be to keep your leverage under control/prudent level in order to have the ability to sustain any shocks that may be coming and or take advantage in a Volatile Market.

We were looking at historical cash rate from 1993-2017, See below (This may only be appealing to statisticians) and I was primarily looking for consecutive months of an unchanged cash rate. You can see we are reaching the resistance level 16-17 where it would appear based on history that current cash rate is due for a move (this is a hot topic, it’s nice to see this through simple historical data). We also looked at the immediate move post long run of unchanged cash rate and as you can see 25bps move was consistent theme.

It will be intriguing to see how the market reacts and what effect this has on asset prices once rates start move again.

Historical Cash Rates & Median House Prices

We also took a look at the Historical Median House Prices for Sydney and Melbourne (other states had less data, so we left them out). Its’s interesting to see the Dramatic effect that Global Quantitively Easing (QE) has had on Asset Prices. We looked at the US QE cycle and added when they were introduced, see below.

Where do you think the Cash Rate and Median House Prices will be at end 2018?

Do you have a strategy in place?

Historical Cash Rates & Median House Prices 1

Data Source: RBA, 1970-1979 from Applied Economics (1991); 1980-2003 are from NSW VG / Department of Housing data. (b) 1970-79 are Productivity Commission data; 1980-2003 are Victorian VG data. (c ) 1973-79 are mean prices from Abelson (1982) factored down by 8% to fit REIA median data in 1980 and 1981; 1980-85, REIA data; 1986-2003, Queensland VG data (d) 1971-79 are mean values from Abelson (1981)Applied Economics (1991) reduced by 8% for medians; 1980-2003 are from SA VG. (e) 1970-89, based on REIA data. 1990-2003, average of quarterly data from the Department of Land. (f) 1971-81 are mean values (Abelson, 1982) reduced by 8%; 1982-83 are interpolated; 1984-90, CBA data spliced to 1991-2003 average quarterly REIA data.. (g) Average of quarterly medians from REIA. (h) 1971-80 are mean values from Abelson (1982) reduced by 9% for medians; 1981-2003 are average of quarterly REIA medians.

J.O.

“Prudential Finance does not provide financial product advice and does not hold an Australian Financial Services Licence. Prudential Finance recommends that investors consider their own Objectives, financial situation and needs before proceeding with any investment and seek professional advice. All information contained within this Website is specifically structured for corporate, business, commercial, construction clients, wholesale and professional investors.”

 

 

 

 

 

 

 

GAIC Rates

Victoria’s Growth Area Infrastructure Contribution (GAIC) historical GAIC rates changes.

The growth areas infrastructure contribution (GAIC) was established to help provide infrastructure in Melbourne’s expanding fringe suburbs.

It is a one off-contribution payable on certain “events” usually associated with urban property development. These are usually buying, subdividing, and applying for a building permit on large blocks of land.

GAIC Rates

Below you can see a Balanced increase in each band per year.
Type B1/B2 and C have higher rates as relates to recent purchases, B1/B2 on or after 2008/2009, C on or after 2010 and or are in investigation areas such as Cardinia, Casey, Hume, Melton, Mitchell, Whittlesea and Wyndham.

GAIC Rates

Deferred GAIC Interest Rate

Interest rate applied on Deferred GAIC Liability which is linked to Victorian 10yr Government Bond has compressed over time for several reasons, most obvious is unprecedented global monetary policy applied (QE) having a significant effect on asset prices/interest rates.

I think it’s important to take a broader view if your deferring GAIC as you can see rates are slowly changing course, 2016-2017 was 2.3%, increased to 2.9% for 2017-2018. You may think this is only a small move, but we are pre-empting perhaps a longer-term upward trajectory where further increases can become more onerous when deferring GAIC payments.

GAIC Rates 2

If you need further information on Growth Area Infrastructure Contribution you can find here;

https://www.sro.vic.gov.au/growth-areas-infrastructure-contribution

Data source SRO Victoria

James Okkerse

“Prudential Finance does not provide financial product advice and does not hold an Australian Financial Services Licence. Prudential Finance recommends that investors consider their own objectives, financial situation and needs before proceeding with any investment and seek professional advice. All information contained within this Website is specifically structured for corporate, business, commercial, construction clients, wholesale and professional investors.”

 

 

NSW Section 94 Changes

NSW Section 94 Changes

A friendly reminder of the changes which provide some form of clarity albeit will introduce another level of uncertainty and unease from Industry Stakeholders with NSW Section 94 Changes.

NSW Section 94 Changes

Changes to Section 94 of the Environmental Planning and Assessment Act, which allows local councils to levy contributions for public amenities and services because of new development, will now be Uncapped.

Caps that have been fixed since 2010;

  • $30,000 in greenfield areas
  • $20,000 in infill areas

(per dwelling or residential lot).

New structure

Greenfield;  

  • $35,000 on 1 January 2018;
  • $40,000 on 1 July 2018;
  • $45,000 on 1 July 2019; and
  • no cap from 1 July 2020 (provided that the levies are in-line with an IPART reviewed contributions plan).

 Infill Areas;

  • $25,000 on 1 January 2018;
  • $30,000 on 1 July 2018;
  • $35,000 on 1 July 2019; and
  • no cap from 1 July 2020 (provided that the levies are in-line with an IPART reviewed contributions plan).

If you wanted to read further, NSW Government Planning circular below.

http://www.planning.nsw.gov.au/Policy-and-Legislation/~/media/EFBE020CD61C4FFD8BC4F51591A447CF.ashx

James Okkerse

 

 

 

the property developer's financier

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