Property Business Financing – Maybank Key Considerations

Tan Kwang Miang, Director, Strategy & Initiatives, Business Banking, gave a presentation of Financing Property Projects at the REHDA Institute Affordable Housing Conference 2018.

The following were the key considerations by Maybank when they review the application property development financing.

Mr Tan listed our these challenges faced by banks:

1. Experience & Track Record
• Landed vs. high rise
• small project vs. big project
2. Minimal commitment by borrower/sponsors
3. Sales achievement / market absorbance
• product/selling price vs. market demand/supply
• Cancellation of SPA after loan drawdown
4. Non-availability of feasibility & marketability study conducted by
independent party
5. Profitability vs. cost-overrun risk
• Based on benchmarking, profit margin is in the range of 25% to 30%.
6. Cash flow projection
• Reasonableness of assumptions (aligned to current market) and
non- availability of sensitivity analysis
• Non-availability of cash flow projection
• Consolidated projected cash flow for developers with multiple projects
running concurrently
7. Competitive Pricing
• Ancillary business to bank
8. Timely submission of quarterly progressive report by developer to the
bank.
• Update on progress of sales achievement and development