Commercial lending performed strongly during the first quarter of 2022, says a Sydney brokerage.
Simplicity Loans & Advisory is a boutique brokerage and property advisory firm, which assists clients with commercial and construction finance, SMSF lending and risk insurance.
Director Matthew Johnson (pictured) said the Sydney, Melbourne, and south-east Queensland markets the brokerage operated in were all indicating growth.
“In the last 12 months for 2021, we have seen a 40% to 50% uplift with cheap interest rates, COVID-19 impacts, and that corner of the property market seen as an attractive investor class for investors to build yield and provide a solid return,” Johnson said.
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Johnson said positive commercial lending was a good outcome for clients as it was much more accessible today than it was five, 10, or 15 years ago.
“It was mainly done by institutions or sophisticated family groups,” he said.
“Now, tech and competition within the lending space creates supply for people wanting to get into the business and with options readily accessible, opens the commercial side of things up for the broader market.”
Johnson said many Australians knew how residential property investing worked, however hesitancy came into play with commercial investing.
“Commercial properties can be vacant for longer than residential properties. It is important to do your homework on the commercial lending process and understand what sort of due diligence you need to secure a proper commercial tenant,” he said.
Simplicity Loans was seeing growth across three major areas.
“Increase in purchases and acquisitions of commercial property are increasing year on year. Clients looking for higher investment returns and positively geared property assets to get an income stream is driving increase in purchases,” Johnson said.
“We have seen an uptick within construction with clients going down the road of building either a residential or mixed-use project, so it will be interesting to see whether this continues with future interest rate increases and supply chain issues.”
“We are also seeing commercial lending against residential assets [developers funding residual stock] grow over the last 12 months.”
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Johnson said the Australian economy was performing extremely well and majority of businesses were meeting demand, with businesses confident there would be continued growth and activity with consumer data trending up.
He questioned whether the upcoming federal election would impact the industry and its recent performance.
“There doesn’t appear to be a huge differentiation between the two parties. Historically a Labor government would spend more but whether they would tax more around investors or businesses potentially is yet to be seen.”
Simplicity Loans was focusing on managing growth and ensuring it provided a great service to its clients.
“We are also working on tech projects at the moment and making sure we are doing the right tasks at the right time, which can be a constant challenge.”
Johnson said it was a great time in the industry and lots of people appeared to be doing well by achieving great outcomes for their clients.
“At the front of mind, it’s about achieving great outcome for our clients. With good competition between lenders and a positive environment from a macro level to do a better job, it is a great industry and long may that continue,” he said.
