Earlier this month, GPS Development Finance (GPS) was approached to finance the completion of a project in a high-growth area of Brisbane—one that had passed across our desk a few years ago.
Despite construction progressing well, a new team taking over, and presales being made, the project was left in the lurch after its out-of-state financier suddenly withdrew, when the project simply needed some extra time to complete the final stages after some previous delays. In a case like this, the previous financier was more focused on getting their money back, as opposed to seeing the borrower succeed.
This is becoming increasingly common for us to see, and reminds us of the importance of having a lender who understands both the project and the broader market environment. In this instance, GPS is proud to be playing a vital role in this project’s completion, and that won’t be easily forgotten by the borrower, who is new to GPS.
At GPS, our lending decisions are based on relationships, and in an industry where adaptability is key, we pride ourselves on being flexible to meet the needs of our borrowers.
This approach has seen us achieve success across the board through past economic upheavals, like the GFC and COVID, and it’s no different today. Remaining adaptable to ‘new norms’ is our secret sauce to seeing projects through to completion in changing times, and our commitment to supporting our borrowers doesn’t waver. However, we’re always aware that as the industry moves, we need to move, and we also need to ensure that our investors are kept up to date.
Our response to the current industry landscape can mean extending loan contracts to give projects the time they need for completion. In others, it involves bringing on already started projects where financiers have let the borrower down, to continue to build a brand centred on flexibility and understanding that will last much longer than the current market conditions.
This also means that as our investors, you may see some current GPS projects extending, or new loans coming onboard that are already under construction, but flexibility like this is not something you need to be concerned about. GPS has over 30 years’ experience in these very situations, so this is not unchartered territory for us.
We’re aware that South East Queensland is experiencing an unprecedented, and exciting, period of growth. On top of record demand for housing from the influx of both interstate and international migration, the cost of construction and trade wages have been at all-time highs. Then, adding to the mix (and extremely unique to our region) is the affects of the Brisbane Olympics, which is further inflating property values and keeping our builders and tradies very busy!
As a responsible lender, our practices in this landscape remain diligent, and our commitment to the success of both our borrowers and investors is unchanged. This means upholding our rigorous due diligence processes, while also acknowledging the realities on the ground to continue the lending practices that you are used to seeing from GPS.
The relationships we’ve built with developers are key to our success, and we understand that supporting them through new times ensures long-term returns for everyone involved. A recent industry article noted that “If you don’t have a building arm, or a builder under your arm it’s very hard to make projects work,” and that while there’s “plenty of stock coming out of the ground, it’s happening at a slower rate.” In response, we’re taking a measured, flexible approach, and matching developers we know with builder teams we trust.
While we can’t say for certain if this high-demand environment is our ‘new norm,’ it is certainly different from the past, requiring a more tailored approach from private, relationship-driven lenders like us. We are focused on doing what has always worked; backing the right projects, prioritising strong borrower relationships, backing projects through to construction completion and ensuring our investors’ interests are always put first.
The outcome, at the end of the day, benefits all parties in the developer-lender-investor equation, and these borrowers will come back to us because we’ve supported them when other lenders, or the banks, don’t understand enough to be commercial in this environment.
If someone you know is interested in investment, we always say our business is built on referrals and would welcome the opportunity to chat to them about GPS! And if an update to your investment is something you’re considering, why not speak with our friendly Investor Services team at any time about our fund opportunities:
