What developers are facing

26 Oct 2023 | Industry updates

Support for developers when it matters most

Although escalating costs in constructing are abating, challenging times in the building industry continue.

RMBL is here to walk with our developer borrowers through market cycles to deliver successful projects.

Over the last 12 months, developers have confronted an array of issues, such as the rising cost and availability of materials and significant labour shortages. RMBL has helped our borrowers through this period, and we continue to offer our extensive experience to our clients to ensure successful project outcomes.

Nevertheless, it’s vital for borrowers to understand the current operating environment, and ways to mitigate any risks they are facing.

Examining current conditions

After a substantial escalation post-COVID, the cost of building materials is starting to normalise. But a significant handbrake that remains is the dearth of skilled professionals in the construction sector, which is preventing some projects from moving forward in a timely manner. This is particularly problematic when it comes to sequencing, scheduling and certifying a project’s key milestones.

As many borrowers appreciate, a related risk is the financial viability of subcontractors and builders in the sector, who have weathered very difficult times from a cash flow perspective over the past two years. With this in mind, it’s advisable for borrowers to undertake thorough due diligence on all business partners at this point in the cycle.

Other more practical checks that are well worthwhile as part of risk mitigation are site visits to assess how projects are progressing and that appropriate labour is working on site. Similarly, monitoring payments are being made to subcontractors is essential to avoid any challenges down the track. We also recommend exploring whether contractors have the financial strength to withstand any unbudgeted delays.

Talk to other developers to find out what their experience has been with contractors and subcontractors you intend to use on your projects.
- Warren Erfurth, Head of Portfolio Management at RMBL

A financier development partner

It is vital to work with financial partners such as RMBL who can help you through market cycles and who have the bandwidth to help borrowers when there are shifts in the market.

As a lender, we regularly inspect properties and engage with borrowers on a weekly basis to review each project’s progress. We talk to the engineers on site to understand their challenges and if there are any delays. Then, we work with borrowers to help them address their challenges.

Our approach is very different to a traditional lender, which typically outsources tasks such as valuations and inspections. One of our most significant points of difference is how close we are to our borrowers and their projects.
- Warren Erfurth, Head of Portfolio Management at RMBL

Aside from how we handle projects, our team has more than 120 years’ experience combined in the running and managing of projects, and many of our team have undertaken their own projects. This has given us hands-on knowledge we can offer borrowers that is unmatched across the industry.

The result is projects that are delivered on track, on time and on budget. This means positive outcomes for all stakeholders, no matter what’s happening across the external environment.