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Residential Development Lender Offers Up A Further $150m

Auckland’s record number of new dwelling consents and unprecedented construction activity is giving Auckland’s largest non-bank lender the confidence to scale up its available funding to an all-time high.

While many finance companies are having to restrict new lending due to capital shortages, New Zealand Mortgages & Securities (NZMS) say its market position continues to strengthen.

Now, a further funding injection for the Auckland development community has been announced by James Kellow - Director of NZMS and leading Auckland property development financier.

NZMS - James Kellow

“In the coming months our lending book will exceed $430m. We have $280m in existing commitments and a further $150m of new money for Auckland projects has become available,” he says.

NZMS is part of the privately-owned development and construction group, Manson TCLM. Mr Kellow says Mansons’ recent sales of commercial development properties, including 136 Fanshawe Street, are enabling the additional funding.

NZMS is now on the hunt for experienced developers to work with. Over the years the Ponsonby-based lender has financed the development of thousands of townhouses, residential sections, apartments, and commercial developments in the Auckland region.

It’s now advising preferred developers it can provide straight refinance and equity release to support project costs, standard development funding, or settlement finance for future development sites.

“Thanks to our Mansons partnership, we can draw from a large balance sheet, funding directly from our own cash reserves and committed banking lines. We can do this at a lower cost than any other New Zealand capital-based financier, and if we want to do a deal, we simply will,” says Mr Kellow.

Its latest round of new lending will see NZMS focus squarely on medium to large scale townhouse developments. The financier says they aim to continue funding at least 250 units under construction at any one time.

“Townhouses work for Aucklanders – they’re relatively cost-effective to build, often on freehold titles, and young families like the outdoor amenity too. That’s why Auckland’s seeing so many townhouses springing up,” he says.

NZMS is keen to continue to supportive quality yet affordable developments in existing urban areas that have been upzoned in the Auckland Unitary Plan for greater residential intensification.

Recently, the Real Estate Institute of New Zealand reported that Auckland’s median house price in July was up 28.0% in 12 months to a record $1,175,000.

“We like supporting projects that pulldown Auckland’s median house price, not inflate it. Hence many of the developers we partner with sell townhouse product with a price point of around $650,000 to $850,000. We’re really comfortable with that. It’s what the region desperately needs and it’s what young couples can afford.

“The $150m from Mansons TCLM is earmarked for funding presold townhouses, and we expect that money to be totally allocated by the end of the year,” he says.

With much of the region’s zoning a lot more permissive, and Auckland Council now more agreeable and efficient at issuing consents, Mr Kellow says the risk for both developers and lenders has reduced.

In fact, in some cases NZMS has funded experienced developers 100% of their project’s cost, comforted by the fact that consumer demand remains so strong. He says it’s not unusual for 80% of townhouse units to be sold within two weeks of a consent being granted.

“While the construction industry is experiencing supply issues and cost escalations, demand for new housing remains incredibly strong. Then when migration returns, we’ll see another boost. NZMS remains very confident supporting the Auckland market,” says James Kellow.

New Zealand Mortgages & Securities is a specialist property financier. They have assisted with delivering nearly $2 billion of property development funding throughout Auckland.

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