A Sydney-based broker has started securing funding from Asian investors after seeing the big four banks turn down “perfectly good” deals.
Speaking at the Vow Financial commercial conference in Hobart last week, Delany Financial director and mortgage broker Michael Delany said he has had his most successful year in construction finance without any help from Australia’s major lenders.
“I wouldn’t say I’ve had a very positive experience with the major banks this year,” Mr Delany said. “My biggest complaint would be that they tend to say ‘no’ to perfectly good deals. You can either get peeved with that or do something about it.”
Unable to secure funding for his commercial clients locally, Mr Delany – a former Olympic swimmer and a gold medallist – has started looking overseas for private funding.
“There are billions of dollars streaming in from funds out of Hong Kong, China and Singapore that are very willing and able and looking to do construction deals,” he said. “They might be more expensive than the banks, but at least you get them done. It allows the clients, the developers, to get on and complete their projects and get the development finished quicker."
He added: “I’ve had my best year in construction finance and I haven’t put one deal with a major bank.”
Mr Delany is not alone. HoldenCAPITAL broker and three-time Australian Broking Award–winner Dan Holden has been making regular trips up north to source finance for developers.
From 2015 to the first quarter of 2017, the proportion of loans HoldenCAPITAL directed to the major banks plummeted from 67 per cent to 20 per cent. Mr Holden attributed the sharp decline to regulatory controls on investment and real estate development lending put in place in 2015.
The Brisbane-based broker has seen a significant increase in volumes by bringing in a wide range of private capital, including mortgage trusts, private lenders, high-net-worth individuals and syndicates of high-net-worth families.