Over the past 12 months, we've seen investment capital tighten and some slowing across real estate markets. Yet we also received at least one call a week from new entrants to the real estate debt capital market, actively looking for deals. And we executed more deals in the non-bank space this year – a total of $500million across bank and non-bank sources, a third of which we underwrote ourselves through Stamford Capital Investments.
We expect the following trends to continue:
- More new capital market entrants will emerge through 2019. These entrants depend on advisors like Stamford for distribution.
- Credit markets will tighten through 2019, given the regulatory and policy pressure on banks.
- Banks will keep cutting costs, reducing their ability to provide personalised direct service to customers.
- Non-bank capital has the appetite and ability to deliver credit solutions to clients when banks are unable to do so.
- Property markets are easing from cyclical highs.
Residential markets are definitely showing early signs of value depreciation, particularly in Sydney and Southeast Queensland. While Melbourne and Adelaide have so far been more resilient, as markets fatigue values are likely to fall. Commercial markets remain strong – however given the current yield compression we do not see value growth in commercial property markets over the short term (unless rents rise).
Unsurprisingly, developers and investors need to look at other options – and this is creating a new competitive non-bank capital space in the market.Committed to Australia's commercial property market
At Stamford, we back our own market assessments. That's why we've purchased an office for our growing Queensland team, at 270 Adelaide Street, Brisbane. Once fit-out works are complete, we'd love to show you around.
Over the past year, our team has grown to 16 across three offices in Sydney, Brisbane and Adelaide – and we plan to open in Melbourne shortly. We'll be expanding our Sydney sales team this year, and our South Australian office is off to a promising start.Uniquely placed to provide certainty
Having just returned from Stamford's annual conference in Queenstown New Zealand, I've been inspired by the energy and passion of this growing team. As well as setting our targets and goals for 2019, we took a deeper look at our values and our 'why' – our reason for being.
We have defined this important purpose as certainty in commercial property capital. Our clients trust our advice, and enjoy greater confidence in seeing their development or investment success. And in these trying times, as credit continues to tighten, certainty is everything.
We also know the value of an infinite relationship with our customers and investors. So we're here for them, not just this year but every year in the future. We know our clients. We know their business and their needs, and that's how we tailor the best possible solution. And we also draw on the strength of our deep and connected relationships with bank and non-bank capital.What will 2019 bring?
Our Investments business continues to go from strength to strength. Now managing over $150million on behalf of Australian individuals and families, we continue to focus on the entire investment journey – from sourcing capital to potentially partnering with customers in joint ventures. This allows us to originate and manage some impressive deals.
This month, we will launch a new investor platform which makes it simpler to invest in these deals digitally. Investors can access details on their holdings, repayment timeframes, tax certificates and quarterly reports online, as well our unique market insights.
This is major milestone for Stamford. We have grown our investor base organically, through word of mouth. Often this is through our investors' accountants, who see the proof in our returns.
Having already settled over $150million of deals in July, the year ahead looks exciting for our clients, capital partners and investors. While we expect to continue placing non-bank capital, our view is that by the end of 2019 banks will begin to open up their books again.
And with Stamford's comprehensive knowledge of what is available in the market, you can have certainty in that solution – no matter what changes and challenges lie ahead in the markets.
Domenic Lo Surdo