Whilst David Kimmorley is a new entrant to this year’s Top 10, Balmain Commercial are certainly not a new entrant to the commercial space. For more than 30 years they’ve been straddling the broking, asset management and investment industries, with offices in Australia and New Zealand. Nevertheless Balmain is being affected by the same forces the whole commercial lending space, but Kimmorley’s office Balmain Canberra is fighting back.
Alarmingly, the brokerage’s volumes in the 2015-16 financial year were almost half those of 2014-15. Property development finance has been hit hard by fears of oversupply and overconcentration causing the banks to pull back. Many have turned to non-bank funders, Kimmorley included: “it can save them money by being ready earlier. We try to accelerate projects by helping clients get started earlier, and that delivers them a better overall financial outcome.”
Where major bank funding is still a possibility, Kimmorley has been blunt with developers on what will be required to access it, namely “putting together an application that will get approved, rather than the dream of what the developer might get…developers have often go their loan specs from what was available six to 12 months ago rather than what is available today.” The types of funding they’ve been providing have also shifted, to more mezzanine and hybrid focused arrangements.
The biggest change however, has been working with existing clients in new areas, Kimmorley explains: “we focused on bedding down some construction deals and helped good clients achieve other business goals.” This has been a chance for Kimmorley to draw on Balmain Commercial’s diverse resources and offer different types of finance; however they’ve also been adding these in office: “we hired and are training a further staff member to assist with SME and home loans growth capacity.”
Thanks to these changes by the brokerage, revenues have remained stable, and Kimmorley is positive about the future. The first quarter of 2016 saw an increase in investment loans, and there’s even light at the end of the tunnel for property development finance, Kimmorley believes: “I think it will stabilise for a while: the APRA changes have been pushed through, and then it depends whether the Sydney and Melbourne markets – and to an extent Brisbane – continue to have the demand which they once had.”
Nor should Canberra be forgotten: although small in size, Australia’s capital is expanding, with its airport getting an international service and the Canberra Times predicting the population could surpass 400,000, driven by young people looking for work. It’s convenient, therefore, that Balmain Canberra also offers home loans, including through its own fund.
Good times do tend to attract competitors, however, and Kimmorley warns that commercial brokers need to reassert the value of their expertise: “With the current focus on residential brokers selling commercial finance and new-to-market entries, the focus needs to remain on knowledge, communication, service and product access to deliver a superior client outcome.”