Construction lender launched for builders and developers

OmegaBuild senior broker Tony Condon

An increasing number of builders are launching residential development projects as councils make more land available to address New Zealand’s housing crisis.

Waikato-based Omega Capital has launched construction financier OmegaBuild to address the number of smaller builders seeking finance for residential development projects, according to senior broker Tony Condon.

Changes to council planning provisions, like the introduction of Auckland’s new Unitary Plan, the record issue of dwelling consents and consistently high immigration statistics were driving the demand, he says.

“Population growth and housing unaffordability are some of the biggest issues New Zealand is facing. We are starting to see more private individuals taking on building projects as a result,” Mr Condon says.

“We’re seeing a lot more individuals coming to us, saying ‘I can do this development myself’, and more builders looking to develop land they already own.”

Mr Condon says OmegaBuild was working with builders, spec builders and smaller developers building one to several houses on a section.

The company also had clients in Auckland looking to build terraced housing where, before the new Unitary Plan, the same developers may have looked to extend a property or renovate.

“We’re a non-bank finance provider targeting the industry, and it’s a growing market.

“Over the past two years the bigger banks have pulled back quite a bit where there is construction risk. They have less of an appetite for developers wanting to buy sections to build on, and much less of an appetite for mum and dad developers,” Mr Condon says.

Although Omega Capital is based in Hamilton, it has customers across New Zealand from Kaitaia to Dunedin. The company finances developments from $300,000 up to $4 million, and is generally working with experienced builders.

While banks had a set approach to lending, OmegaBuild works on assessing the viability of a house building project, and working with developers to come up with creative solutions.

“We want to work with builders who have great projects but are being held back because of a lack of funding.

“We understand development. We will look at how we can compartmentalise loans and capitalise interest costs. We have the business experience to help see a project through, end to end.”

Mr Condon says while non-bank lending had higher interest rates, it was often for a shorter period as projects got established. Clients often shifted back to the retail lending market once their projects were set up and paying.

“A builder can come to us and we can help work out a package for them — they don’t have to go cap in hand to the retail banks and say I want to do this. There are real limitations to that approach.”