Savills News

Spotlight on Australian real estate debt market sees Savills launch new Capital Advisory division

With the appeal of the Australian real estate market, global yields at all-time lows and regulatory change attracting new domestic and global lenders to enter the market, debt funding is having an increasingly significant role in real estate transactions.

According to research from Savills Australia, several new lenders have entered the Australian market due to the shift in risk appetite from traditional lenders, opening up opportunities for new lenders to compete. With the relative attractiveness of Australian debt returns, we have seen investors in Australian real estate with significantly more debt options to navigate and select from.

According to Paul Craig, CEO of Savills Australia, this increased competition and recent interest rate cuts by the Reserve Bank means investors can take advantage of lower cost of funds to lever the Australia Property market, and in particular office and industrial assets. In addition, for global capital, favourable currency exchange rates further enhance this opportunity. This in part, is pushing asset values higher in limited supply markets such as Sydney and Melbourne.

“Recent history suggests a 4% yield differential to 10yr bonds as a trigger point for investors to chase property assets. This highlights the potential for further capital value appreciation as bond rates remain low for longer and investors look for superior yielding, lower risk assets as opposed to more traditional equity and growth assets,” he said.

Over the past decade, Savills Australia’s client base has become more globalised and financing options are critical to this client base. As such, Mr Craig said Savills see a growing opportunity to service this requirement, prompting the launch of a new Capital Advisory division.

Ben Jackson and Andrew Cottam have joined the team as Directors and will focus on capital raising services and advisory to clients on how to manage and structure financing for the acquisition or development of assets.

The team will work closely with existing transactional business lines to provide a more holistic service to our clientele.

Ben Jackson joins the team as a specialist within this space, having spent the previous six years at JLL, most recently as a Director of Debt Advisory, and prior to that working with Lendlease for two years. Similarly, Andrew Cottam also joins as a specialist after two years with JLL where he was a Director of Debt Advisory. Prior to that he has significant experience in capital raising and treasury roles at both Lendlease and Macquarie Group spanning eight years.

Both Ben and Andrew recently arranged the acquisition finance for the Super Prime Distribution Centre transaction at 99 Sandstone Place, Parkinson QLD, and commercial office reposition of 31 Queen St Melbourne, VIC.

Mr Craig said “These acquisitions mark an exciting time for our business, allowing us to broaden our capability and provide capital raising services and advice to clients on how to manage and structure their financing for the acquisition or development of an asset.”

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