Speaking at an AltX event for the construction industry, NSW Building Commissioner David Chandler OAM said active lending could attract consumers and investors in the future. Real estate debt investments provider, AltX takes an active lending approach to all its investment opportunities, preserving capital while delivering quality construction products to market.
“We need people to understand the way in, the stay in and the way out so people can invest with greater confidence. Active lending is critical. Financiers have taken their eye off the ball so development drawdowns are frequently not compliant with standards,” Chandler said.
Why does AltX opt for active lending?
AltX Co-CEO and Co-Founder, Nick Raphaely said given the challenging year in the market and the impacts of COVID-19 and inflation, investors want to be confident in the knowledge that their investments are thoroughly evaluated on the credit and property development side.
This means AltX works with the developer and builder on every project to pre-empt any issues or delays while also ensuring the Office of the NSW Building Commissioner compliance requirements are met. AltX’s project management team includes specialists with a range of expertise including an architect, surveyors, engineers and planners, who visit development sites at least fortnightly and ensure projects are built on budget and on schedule.
“Not all construction projects are the same. We maintain a tight funnel in scrutinising deals and this means only a small proportion of deals presented to us are ultimately funded. We lead with our own capital and bring in investors alongside us,” Nick Raphaely commented.
In addition, AltX’s rather rigorous due diligence process builds realistic contingences into each project to protect debt investors’ capital. While the current significant undersupply in property and the dramatic fall in the rental market presents opportunities for residential property investors, Mr. Chandler highlighted the market is ripe for further risk management.
Why is due diligence critical in the construction industry?
The Commissioner’s office supports the introduction of iCIRT, a five-star rating system, managed by Equifax to assess building professionals., Mr. Chandler hopes 80% of developers will be rated next year with the first five-star rated developer to be named later this week.
“If the industry had applied more due diligence and active lending management, we may have avoided much the brand damage that has had such an unacceptable impact on purchasers. The rules in NSW have changed for the good and costs are normalising. The cost of non-compliance and rework that was once transferred to consumers is now retracting.”
Speaking at AltX’s event, Assetline Capital Director, George Khoury, said developers could no longer get away with mediocre construction. “We have to be aligned as a lender, and we only want to deal with high quality, high calibre players. If you’re not working to the best quality you can, you won’t have an end customer – and you won’t get the capital,” Khoury said.