#79: Risk, Resilience, and Rewards with Drew Bowie & Mike Bird
By
Michael Bird
March 26, 2025
•
11
min read
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In the latest episode of Market Insights, Mike Bird, CEO of Urban.com.au, sits down with Drew Bowie from MA Financial to discuss risk management in property development and the role of insurance products like resilience and latent defects insurance (LDI). The conversation sheds light on how financiers and developers are navigating market uncertainties and the increasing importance of insurance in mitigating construction risks.
Key Takeaways from the Discussion
1. Time as a Risk Factor in Construction Lending
Time is a critical risk in property development, influencing costs and financing.
Delays in construction lead to increased financing costs, impacting overall project viability.
The ability to manage and mitigate construction risks effectively can significantly impact a project's success.
2. Construction Risk and Market Uncertainty
Financiers assess multiple risk factors, including construction risk, equity risk, and liquidity risk.
Developers face challenges in maintaining margins while ensuring quality and managing market demand.
Unforeseen events, such as builder insolvencies, pose significant threats even in strong economic conditions.
3. The Role of Insurance in Risk Mitigation
Insurance products, such as resilience and LDI, provide additional protection against construction defects.
These products offer security to both financiers and consumers, increasing confidence in off-the-plan purchases.
Having an insurance-backed project can enhance marketability and improve consumer engagement.
4. The Impact of Insurance on Lending and Consumer Confidence
MA Financial supports insurance-backed projects and may even help finance part of the associated costs.
Consumers are more likely to invest in developments with insurance coverage, viewing it as a safeguard against defects.
Surveys indicate that buyers are willing to pay a premium for insured properties, making it a viable investment for developers.
5. Future Outlook on Insurance Adoption in Property Development
Early adopters, such as MA Financial, recognize the long-term value of insurance in stabilizing project outcomes.
As builder insolvencies rise, insurance-backed projects offer a safer bet for both lenders and buyers.
Market awareness is growing, and developers are encouraged to explore these options to enhance project resilience.
Final Thoughts
Drew Bowie emphasizes that developers should investigate the benefits of resilience and LDI insurance, as it not only reduces risk but can also improve project valuation and buyer confidence. As the property market evolves, integrating robust risk management strategies will become increasingly vital for sustained success.
For developers and financiers, understanding and leveraging these insurance products can be a game-changer, ensuring smoother project execution and greater market credibility.
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