THE PROPERTY DEVELOPMENT REVIEW
CAPITAL & CONSTRUCTION – WHO’S FUNDING WHAT IN FY26 QLD MARKET OVERVIEW
Mixed-use regeneration zones, including Southport with its proposed indoor arena, are also drawing attention from both local and international investors aiming to revitalise key CBD precincts. How are tighter credit conditions and sustained construction cost pressures affecting funding models for new projects in QLD? Tighter credit conditions and high construction costs are definitely putting pressure on how new projects are being funded in Queensland. Traditional bank lending has become harder to secure, especially for developers without strong pre- sales or lease commitments in place. As a result, we’re seeing more developers turn to non-bank lenders, joint ventures, or capital partners to get projects off the ground. Construction costs are also forcing developers to be more cautious with feasibility, which often means scaling back plans or delaying projects until numbers stack up. This environment is making deals more complex and increasing the need for flexible funding solutions and experienced delivery teams. Are you seeing more conservative assumptions, delayed projects, or increased requirements around pre- commitments? Yes, we are seeing more conservative assumptions across the board. Developers and funders are being a lot more cautious with their numbers, especially when it comes to future values and construction costs. There are definitely more delays, with many projects being paused or slowed down until funding or market conditions improve. Pre-commitments have become more important than ever. Whether it’s pre-sales for residential projects or lease commitments for commercial ones, lenders and investors want to see proof of demand before moving forward. It’s creating a more risk-aware environment where planning and preparation are key to getting a project off the ground. Are you seeing a rise in alternative funding structures — such as joint ventures or private debt arrangements - becoming more common? If so what’s prompting this trend? Yes, we are definitely seeing a rise in alternative funding structures like joint ventures and private debt arrangements. This shift is being driven by tighter lending conditions from the banks, which are making it harder for developers to secure traditional finance, especially for mid-sized projects. As a result, more developers are teaming up with capital partners or turning to non-bank lenders who offer faster, more flexible funding without the same pre-sale or equity hurdles. Private debt funds have grown rapidly in recent years, with global players like Warburg Pincus entering the market and local lenders stepping in to fill the funding gap. These alternative models are helping projects move forward in a market where traditional finance is harder to access, and they’re becoming a key part of how deals are getting done across Queensland.
What are capital partners looking for in a project heading into FY26 — and are you noticing a shift in their expectations around feasibility or risk? Heading into FY26, capital partners are being a lot more cautious and want to see clear numbers before they commit to a project. They are looking for solid feasibility reports that show the project still works even if costs go up or sales take longer than expected. There is definitely less interest in risky or speculative deals. Instead, they want to see things like confirmed pre-sales, lease agreements, or anchor tenants locked in. Lenders and equity partners also expect developers to show real demand in the area and a plan for how the project will be delivered from start to finish. In short, it is no longer enough to have a good idea. You need to prove the numbers stack up and show that the risks are under control. Has there been increased interest from interstate or offshore capital, and if so, what’s drawing those investors to your market? Yes, we’re seeing more interest from interstate and offshore investors in Gold Coast commercial property. A prime example is the joint venture between Frasers Property Industrial and Morgan Stanley Real Estate Investing—it includes a major warehouse in Stapylton, on the Gold Coast, as part of their $600 million industrial portfolio deal. Plus, the proposed 12,000-seat arena in Southport has sparked overseas inquiries, especially from Japanese investors, eager to back entertainment-led development and tap into future growth. These investors are attracted by the Gold Coast’s fast population growth, strong infrastructure investment, and the long-term prospects tied to the 2032 Olympics and other regional projects. Over the next 12–18 months, where do you see the biggest opportunities or headwinds for developers seeking funding in QLD? Over the next 12 to 18 months, I think the biggest opportunity for developers will be in well-located projects that meet real demand—especially in areas like the Gold Coast where population growth, infrastructure spending, and limited supply continue to drive the market. Projects that offer essential services like healthcare, retail, or industrial space are likely to get the most traction with lenders and investors. On the flip side, the biggest headwind will be getting funding for higher-risk or speculative developments, especially those without pre-sales or lease commitments. Lenders, particularly non-bank lenders who have been more active recently, are still backing projects, but they are being more selective and expect developers to come to the table with strong numbers, clear delivery plans, and proven demand. In short, the money is still there, but it is flowing more carefully, and only into projects that are de-risked and well thought out.
Adam Grbcic - Commercial Sales Specialist | Kollosche Commercial
What’s your current read on how capital is flowing into commercial real estate development in QLD heading into FY26? Are you seeing an increase or slowdown in funding activity compared to this time last year? As we head into the new financial year, there is a clear shift in momentum for commercial property across Queensland. Compared to this time last year, we are seeing more capital coming back into the market, driven by growing confidence around interest rates and strong government investment in infrastructure. This has sparked renewed interest from a broad range of buyers, from private investors to larger funds, particularly in sectors like retail, medical, and industrial. With more projects getting off the ground and transactions picking up, it is clear the market is starting to turn a corner. Which types of capital are most active in your market right now — for example, private equity, family offices, non-bank lenders — and what’s driving their appetite? Right now, non-bank lenders are the most active type of capital in the market. As interest rates have risen and traditional banks have become more cautious, non-bank lenders have stepped in to provide faster and more flexible funding. They are filling the gap for developers and investors who may not meet the banks' tighter lending requirements. These lenders are especially active in deals ranging from $5 million to $50 million, where bank funding is often harder to secure. What is driving their appetite is the strong demand for private credit, the ability to earn higher returns than through traditional savings, and growing confidence in the commercial property market. Which asset classes are attracting the strongest capital interest in QLD right now, and what’s fueling that demand? Is this a continuation of recent trends or a shift in focus? Right now, the strongest demand we are seeing is for three main types of commercial property: retail, industrial, and office. Retail is the standout at the moment, especially neighbourhood shopping centres
that include supermarkets, medical tenants, and food outlets. These are popular because they provide steady rental income and there are not many new ones being built. Industrial property is still performing well, particularly warehouses and logistics hubs in areas like Yatala and Stapylton. That demand has been consistent, driven by population growth and the ongoing rise of online shopping. Office space is also gaining interest again, particularly high-quality buildings in good locations or those that suit businesses wanting to own their own premises. There is a bit more confidence returning to that sector now that many companies have settled into their work arrangements. Overall, industrial and office have been strong for a while, but the renewed interest in retail is a noticeable shift, with investors focused on stable long-term income. Are there specific locations, or end uses that funding partners are prioritising in FY26? Funding partners entering FY26 are targeting places with strong population growth and major infrastructure projects. On the Gold Coast and across South East Queensland, capital is being directed toward several key areas. Transport-linked precincts, such as those near the planned Sunshine Coast to Gold Coast rail upgrades and airport corridors, are attracting interest due to improved future connectivity and commuter access. Health and education hubs are also a priority, supported by significant government investment, including $18.5 billion for hospital upgrades and $21.9 billion for schools. Tourism and event venues are gaining momentum, with projects driven by the upcoming 2032 Brisbane Olympic Games and $446 million in tourism infrastructure funding. Industrial and logistics estates, particularly around Yatala and Stapylton, remain in high demand, supported by strong interest from global capital groups.
ADAM GRBCIC
88 – August / September 2025
August / September 2025 – 89
Powered by FlippingBook