by Tommy Friedman | August 19, 2021
What a headache!
That is what we’re hearing from many of our Sydney developer clients.
Mixed messages from the authorities, labour shortages and delays - everyone’s nightmare.
Delivery is one of the biggest risks for every property developer and Covid construction delays mean cost blowouts and the potential for a slow death courtesy of compounding interest.
One Sydney builder/developer we spoke to laments the fact that despite him being allowed to open his sites back up, LGA shutdowns in Western Sydney (where many construction workers live) mean that he has nobody to work them.
Construction delays mean settlement delays and the prolonging and increase of a project’s peak debt status, as well as escalating holding costs. The longer a project is delayed thanks to State Government health directions (where costs are predominantly worn by the developer), the more likely the developer is to incur greater costs and land in default with their lender. Melbourne’s protracted 2020 lockdown and caps on construction workers were a test case for builders, developers and financiers who overall managed to navigate the difficult situation well. Sydney is now facing the same issue and thankfully, in some cases Melbourne’s lessons are baked into construction contracts and tripartite agreements.
Nonetheless, challenges remain; it is important that developers partner with understanding and flexible funding partners. Wefund sources finance for our clients from lenders that see themselves as partners in a project, that understand development, its risks and timelines. We build relationships for our clients, helping them partner with funders that won’t rush to put them in default and charge penalty interest.
When we source our clients’ finance for a project, we don’t look at the project as just another transaction, we look at it as a partnership between lender and developer. Because when the unexpected happens (which in this industry is often), you want to deal with someone who will work through it with you, not who sees it as an opportunity to make a few more basis points in penalty interest.
If you are interested in learning more about how Wefund can help you, submit your scenario here.