New Zealand Lender Sentiment Survey 2024

Main Points:

Twenty three lenders participated in CBRE’s annual survey including international and domestic, bank and on bank, lenders.  The main findings of the report include:

• Lending appetite is growing, especially for construction/development lending. The most notable change from last year’s survey is the more positive attitude of domestic banks.  
• For investment lending, Industrial is the most preferred asset class by international and domestic bank lenders. Core office is also well supported by domestic banks, less so by international and non-bank lenders. Non LFR retail, value add office and alternative asset classes outside of student accommodation are not extensively sought by most lenders
• Appetite for development lending is improving towards land subdivision and apartments. 
• Lender capacity has lifted on 2023, with increased LVR capacity and lower ICR requirements across the board. Notably 65% of lenders have the capacity to lend at a LVR of 60% or more, a capacity just 50% of lenders reported last year. Bank lenders have lowered their ICR cover requirements from 1.50x -1.75x in 2023 to 1.25-1.75x in 2024
• Sales and loan metric requirements becoming less stringent on construction loans. The distribution of maximum LTR and LTC requirements on construction loans have shifted over the year to allow greater leverage on construction projects. 
• Green Financing important for banks, of little importance to non-banks. Of those respondents who would offer green loans (mostly banks) , margin discounts are the preferred loan benefit, with 75% of respondents indicating they would offer a margin discount of <20 bps and 25% willing to offer >20bps. One third of respondents would offer a softened ICR threshold.