Coastal projects put on hold

THE global economic crisis has put at least two developments on the North Coast at risk, while the big freeze on regional mortgage funds may cause others to follow.

Queensland company Petrac Developments Pty Ltd has gone into receivership, leaving the future of the planned 33-block eco-friendly Seacliffs residential development at Suffolk Park in doubt.

And Becton Property Group's Northbeach Byron development is also being reassessed, while the recent announcement of a 90-day freeze on funds by the three big mortgage trusts, which have traditionally funded many local developments, means millions of dollars in developer loans are now tied up.

Ballina financial advisor Brett Ulrick, of Elstone Partners, said it was all to do with credit rationing, which was happening on a global scale as a result of banks not trusting other banks.

“When credit rationing occurs it essentially reduces the supply of money and when you reduce supply and demand remains constant, it forces prices up,” he said.

“In this case it is the price of debt, which is obviously the interest rate.

“The result is the money that is available for lending is only available for the best risks and for a higher price.”

Mr Ulrick said this created a number of problems for developers, including the cost of developing going up and only the high quality developments with lower loan to value ratios would be able to attract finance.

In the case of Petrac, it is believed the company hit trouble when its preferred equity lender, Valad, was caught up in the credit crisis facing the Bank of Scotland.

Corporate advisory and recovery company Ferrier Hodgson has taken over four entities within the Petrac Group, including Petrac Developments Pty Ltd, which is behind Suffolk Park's Seacliffs project.

The receivers said the ongoing development of the project was uncertain and financial records were still being reviewed.

However, a spokesperson for the Petrac Group said its Pacific Pines development at Lennox Head was not in the hands of receivers.

Becton's Northbeach Byron development is also at risk, with development manager Matthew Rice saying the project was being reassessed due to economic uncertainty.

Ballina developer Elton Stone, who has been developing on the North Coast for more than 40 years, said the credit crunch meant developers had to be more cautious.



How beers around the campfire led to this very cool business

premium_icon How beers around the campfire led to this very cool business

They left their council and construction jobs to follow a dream

'This will be huge': New show like a theme park ride

premium_icon 'This will be huge': New show like a theme park ride

"You'll come out saying, 'what did I just see?'”

Funding to save 300-year-old pine trees

premium_icon Funding to save 300-year-old pine trees

MP says coastal cypress pines need to be preserved

Local Partners