This article is from the Australian Property Journal archive
THIS will be the year of opportunities for savvy investors as land speculators default on settlement and will look to sell at market prices after paying too much during the boom, according to property developer Resi Ventures.
Cofounder and chief executive Khurram Saeed said dozens of speculators who had put down deposits under a “put and call” option, or a straight contract, now just want to on-sell the property to save their deposit.
“If they have bought well, we will look at a doing a deal to save their deposit and share the upside – however we are finding a lot of them have paid too much for the land and therefore we can’t make it work.
Resi Ventures has just secured more than $30 million of funding for construction of its Monument Estate in Plumpton from non lender and private equity firm Wingate. Wingate also funded construction of Resi Ventures’ Accolade development in Rockbank last year.
“Resi Ventures has the capacity to expand our footprint beyond the Western suburbs. We are canvassing opportunities using our landowner partnership model across broadacre development sites throughout Melbourne,” he said.
The Resi Ventures niche is in carrying out Land Development Agreements (LDAs) with the landowners where the group shares the development profits.
“For example, at Monument we have been on a journey with the original Landowners over the past 4+ years, from funding the PSP, obtaining the permit, getting all the pre-sales needed for funding and now having started civil works with a major civil contractor.
“We can’t wait for the landowners to reap the rewards of this LDA in the coming months – under the LDA they will make a lot more money than if they had just sold the land to us. So, it’s truly a win win scenario,”
Saeed said the credit squeeze would ensure only experienced developers with track records will be funded by risk averse private lenders as banks continue to withdraw funding.
“The key to getting funding in this environment is to de-risk the project and have a clear exit strategy for the funder. Wingate funded our developments on the back of strong presales & the fact we have an experienced team that has a track record of delivering successful master planned communities,” he added.
Saeed said although private funding is more expensive than a bank, they are a lot more flexible.
“Wingate has allowed us to fund eight stages concurrently in our Accolade estate, so we get to deliver titles to the purchasers a lot sooner.
“If a bank had funded it, they would want us to complete the construction on the first couple of stages, pay back the loan, and then go again on the next stage. With Wingate funding us we can fast track the construction process.”
Australian Property Journal
