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The residential downturn had a ripple effect on general development across the Harbour City, but one project development leader sees a return of more projects.
The last two years saw a downturn in off-plan sales, which impacted general development, McGrath Projects developments general manager Michael Bevan said.
“Both major developers and the small- to medium-sized privately owned companies have been reluctant to secure new sites. However, during the latter part of 2019, the general residential markets recovery has seen the ‘developer’ community start to strongly look at acquisitions again, creating pipeline for 2021 onwards,” he said.
Mr Bevan noted how the NSW State Planning Department had required councils to exhibit their local strategic planning statements, which shows how councils will deliver new areas for development.
Additionally, councils have to produce new Local Environmental Plans over the next two years.
“This will mean new zonings, upgrades to current zonings and better/clearer gateways to new development,” he said.
“During the downturn over the past couple of years, we have seen bank funding become tighter, especially for smaller, less sophisticated players. Likewise, many of the overseas companies that didn’t have direct Australian offices or partnerships have left the market almost entirely as capital inflows have tightened dramatically.”
This resulted in more stable and sophisticated companies into the acquisition phase.
“Likewise, the private players who are well funded are also starting to look harder at site deals,” Mr Bevan said.
As a result of the drawback in lending by major banks, there has been growth in secondary lending markets.
“This has seen better access to funding for experienced and successful developers open up. This will further push the focus towards new site acquisitions,” he said.
As a result of an increase in inquiries from development groups, McGrath Projects recently appointed Mr Bevan to his current role.
“We are seeing a renewed level of enquiry from development groups seeking both DA approved and raw sites. In particular, smaller and medium-sized developers are increasingly on the lookout for redevelopment opportunities, many of whom are cashed buyers not requiring bank funding,” McGrath Projects general manager Adam Sparkes said.
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