The term “property market” tends to be used as a catch all for what is an extremely diversified segment. Variables include geography, sub asset class, size and price range. By sector alone we could be referring to:
- Residential (which is further categorised into apartments, townhouses, houses, luxury)
- Commercial office
- Retail
- Industrial
- Specialised (childcare, student living etc.)
Even within these residential sub classes, a lender might take a very different view on a high rise apartment block over a boutique development. At TierONE Capital, whilst location is consistently a key factor in our credit assessment, we are also very focused on the marketability of the property we are lending against. Be it a completed asset or yet to be constructed, our preference is to gain comfort from the value of the secured properties at the end of the loan term. Residential properties in the median price range for the suburb are of particular interest because we believe such properties will always appeal to the owner occupier market.
In the past few months, there has been an increase in lending opportunities secured by industrial property assets. This includes warehousing and logistics; manufacturing and sub assembly; and storage and micro factories. The key driver for this interest has been a rapid change in some of the underlying economic trends:
- Growth of e-commerce
- Supply chain certainty
- Potential shift to domestic from offshore production for essential products
Whilst investors may not have considered the Industrial property sub asset class for private lending, we anticipate that further loan offerings will see a shift in portfolio mix to industrial as the category develops.
If you are a sophisticated investor and would like to find out more about the TierONE Capital offering, please contact us here.
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