Dec 02, 2011 by DFP | Comments (0) | Leave a Comment | Rss Feed

With the world watching closely, as Greece, Italy and Spain now struggle to meet there debt obligations, the developer on the street must be asking how this will impact me.

Simply, Institutions and Banks across the Globe underwrite their capital adequacy through investment from other Institutions. After the GFC, Australian Banks’ looked to re-weight their balance sheets from largely offshore Institutions to local retail depositors. This strategic move has faired well to ensure that the Primary 4 are not as susceptible to the Global issues. That being said, this unfortunately has seen an increase to the cost of funds to the Banks’ which inevitably is passed onto borrowers.

The RBA has taken a very measured response in regards to the Global economy, however, finds itself further and further out of favour with the general population who have an ever increasing concern about the future outlook. Businesses across the economy that are not anchored to the mining industry juggernaut are finding capital and debt hard to find. This coupled by conservative household spending patterns further complicates the issues.

Further rate cuts will flow through, as current interest rates are still not sufficient to ensure business confidence and to improve underlying consumer spending. However due to the cost of funding becoming more expensive, it is highly likely that the full benefit of those rates cuts will not flow entirely through to the consumer. This has already happened.

It is therefore appropriate for developers to look to geographic areas and specific demographics that are doing well. Recently, two such areas that DFP has had excellent results are funding developments where Self Managed Superannuation Funds (SMSF’s) have participated at an equity level, and geographic areas in QLD where there is a significant under supply of housing for the Mining industry.

If you would like further details on those recent successes please contact one of DFP’s Directors.
Equity Participation

With the ever increasing conservative banking lending policies frustrating most developers, DFP has negotiated a number of underwriting facilities for developers whom require additional equity to undertake there development. Predominately these funds are coupled to developments, which have sponsors with demonstrated credentials in both the residential and retail markets. The Directors of DFP welcome inquiry from existing and introduced client’s who would seek further details.