MaxCap expect appetite for apartment projects to get through APRA tightening
Bill McWilliams, the chief investment officer at MaxCap Group, reckons the recent macroprudential intervention from APRA was unlikely to have a material impact on house prices or credit growth.
"We do not expect there to be any constraint in buyer demand for either apartments or house and land packages as a result of the intervention, with appetite to continue to be driven by supply and demand fundamentals," McWilliams said.
MaxCap is a leading real estate finance and investment manager.
"We do however expect APRA will continue to monitor LVR’s and Debt to Income Ratio’s for new lending closely, and depending on trends, this could lead to a series of progressive interventions, as happened in 2014 and 2017."
The recent macroprudential intervention from APRA requires lenders to include an additional 0.5% servicing buffer.
McWilliams said this was "was consistent with our expectations given the recent growth in housing credit at moderately higher debt to income ratios.
"We consider this to be a subtle change only which has been implemented to improve the resilience of borrowers in periods of economic shock by creating a larger servicing buffer.
"Our view is that such a slight change to affordability is unlikely to have a material impact to house prices or credit growth, as less than 10% of home loan applications borrow at capacity.
"APRA itself said “the overall impact on aggregate housing credit growth flowing from this is expected to be fairly modest”.
Founded in 2007, MaxCap have originated and managed more than $12.3bn of Australian CRE debt across more than 450 loans, with current funds under management and advice of $4.1bn.
Earlier this month McWilliams joined the team at Landream and V-Leader to break ground on the project The International in Brighton, which is being funded by MaxCap.
MaxCap has provided a first mortgage construction facility to S&S Projects for their 11-storey luxury boutique apartment project, Awaken on the Gold Coast.
MaxCap has funded salvo’s mixed-use residential project in Melbourne’s Southbank, with the non-bank lender providing a $75 million first-mortgage for the development of Stature, a 35-level mixed-use tower with 175 apartments, commercial office space and ground floor retail space at 35-51 Hanco ck Street.
MaxCap Group recently delivered a first mortgage construction facility to Lu xcon for the development of its East Melbourne apartment complex.
A $76m debt facility covers land and construction funding for The Address.
Marketing commenced for in late February 2021 with the Sydney-based developer Lu xcon securing strong off the pl an sales in its first project in Melbourne.
The $125-million, 23 apartment development overlooks Fitzroy Gardens saw five local buyers seek out the apartments prior to their recent official launch.
The 10-storey park-side development at 372-380 Albert Street in East Melbourne features two-, three- and four-bedroom apartments.
The two-bedroom apartments are priced from $2.5 million to $3.15 million and three-bedroom apartments, from $4.5 million to $5.35 million.
The three-bedroom, plus study, sub penthouses are price at $8 million to $8.75 million.
The penthouse is priced at $25 million with its own lap pool.
All of the apartments will have outdoor areas in the Woods Bagot-designed complex.
The first five sales were secured by April with about 95 per cent of inquiry being downsizes from larger homes across Melbourne.
The apartment project will replace a nine-level office building acquired for $30 million in May last year from entrepreneur Nathan Cher, the co-founder of the Run Property Group.
“Industry research suggests that East Melbourne is short of apartment sites for developments," said MaxCap’s chief investment officer, Bill McWilliams.
“There is significant demand in the East Melbourne area with purchasers looking for quality mid to high rise towers,” Mr McWilliams said.
“Demand is reportedly strong in the $2m - $5m range and we have seen sales at the level of $30,000 per square metre and above in several recent transactions.
Luxcon's managing director Ilya Melnikoff recently acquired its second trophy apartment sites in inner Melbourne.
It purchased the Beacon Cove Food Store site in Port Melbourne for $16.65 million. The 1400 sqm site at 103 Beach Street, across the road from Station Pier, was acquired from Melbourne developer V-Leader, which paid $11.2 million for it in 2017.
The East Melbourne project is expected to be complete by December 2022.
Lexicon's completed Sydney projects include The Aristocrat of Rose Bay at 62A Dover Road, Rose Bay; Jardine at 35 Oxford Street, Epping, and 88 Kensington at 88 Anzac Parade, Kensington.
