THE PROPERTY DEVELOPMENT REVIEW
and what is secured against the funds being borrowed. Private equity and sovereign debt is seem to be the go to for financing deals most likely caused by the lack of flexibility with traditional lenders. In closing, are there any other investment trends or market themes that you’re analysing that are likely to have a material impact on values in 2024? The investment trend that has been around for the last 5 years is really coming down to what value the investor could and to the transaction to increase value of assets on the exit and is coming down to the speciality of that investor and what they have worked on previously. Some specialise in securing difficult DA’s and others specialise in securing tenants and adding more NLA or GFA to sites. We are seeing an upward trend in developers bringing in the construction arm into their business to reduce cost and become more of a developer builder rather than outsource the construction. This is simply helping developers to keep the cost of building from rising beyond feasibility. While many have sat out for the past few years we are seeing a re-entry into the marketplace.
corporates and institutional investments firms the opportunities to convert existing large land holdings such as Golf Course and farms that otherwise would have been overlooked by these traditional investors as now we are seeing syndicates and private investors acquire with the intent to convert to LLC’s both small and large scale. The evolution of a traditional site deal has changed and the shortage of these opportunities now see these acquirers structure deals with more of an “out the box” thinking. In some cases both zoning and capital gains tax creates a major issue in new sites coming to market and land being released for developers. Based on your discussions with vendors / potential vendors, how are they observing market dynamics in your region & to what extent do you expect an increased volume of properties coming to market over the course of the next six or so months? The biggest issue that vendors face when selling any form of asset and I guess hindering these sales are CGT. We have found that the increase in activity and increase in value for these sites is that most vendors don’t determine what the actual exit cost is going to be on a particular asset and leave it to the last minute. Volume is increasing month by month on opportunities as interest rates rise due to an overwhelming number of reasons we are already seeing volumes up by 30-40% already One of the defining themes over recent years has been the influx of private capital & foreign capital targeted toward commercial real estate assets - how have you observed this thematic & what’s driving this investment with reference to the residential land market? The market influx of private and sovereign funds has been evident in a number of our transactions and is ultimately coming down to the cost of borrowing funds and the way traditional finance deals are structured
June / July 2024 – 87
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