By looking to new sources of lending, Kanebridge Capital is moving up the charts despite the banks’ crackdown on development funding

Kanebridge, as Marwan Rahme describes it, starts with finance “and branches out from there”. The brokerage provides almost everything a property developer might need, with an in-house development management service, Rahme explains, “so we can become the project manager/development manager so we can overcome the constraints and negate the risks”. Kanebridge even has a marketing division to help increase presales.

It’s an approach that has served Rahme well for almost 18 years in business and four successive years in the Top 10, as he has gradually moved up the rankings. Yet by catering to Sydney’s property developers, he has found himself in the eye of the storm as lenders have become increasingly concerned about this market.

Changing bank appetites
“I think less willing to lend is an understatement; they have stopped lending,” Rahme explains. “In my space it’s almost impossible to get a construction deal set anywhere with the majors.” Even deals with suitable presale coverage and average LVRs simply are struggling, he says. The only exception is “if you’re an existing client and you have a facility in place and that gets paid back, they may consider funding your next project if it’s in the same parameters”.

Furthermore, quantity surveyor reports and valuations are taking longer than ever. “We say if we can’t fund it, no one can fund it, but it is tough and it is hard.” In Rahme’s opinion, “banks have a commitment to not lend to construction projects … I don’t think they’re open for business”.

Looking elsewhere for finance
The banks’ absence isn’t holding Rahme back, however; he’s just received documents for a ninefigure project in Sydney, backed by a non-bank and private funders. While much of the focus has been on overseas funders, Rahme says “dealing with overseas companies is tough. I don’t like it, because the money never gets here. It’s too hard; there are too many factors such as currency exchange fluctuations”. He prefers overseas firms with a record and fund in Australia.

Outlook for 2017/18
While Rahme can’t see conditions getting tougher, and says non-bank funders are “propping up the market”, he warns that lending restrictions will have human consequences. “My concerns are for 2018 you’re going to have a lot of subcontractors, a lot of building suppliers, a lot of people that work in the construction industry that just might find themselves out of work, unless things change.”

“Banks have a commitment to not lend to construction projects … I don’t think they’re open for business”