Australian real estate fund manager Qualitas has raised A$1.2bn (€799m) for its latest construction debt fund after securing A$440m from an Asian institutional investor.

The additional capital raising takes Qualitas Construction Debt Fund II well beyond its original target of A$750m and more than twice the size of its predecessor, which closed in 2017 with around A$540m.

The latest equity commitment will be deployed into a new apartment project in Sydney.

Mark Fischer, Qualitas co-founder and global head of real estate, said the unnamed investor had invested in various Qualitas vehicles.

“The investor shares our view that there is a difference between detached housing and apartment markets,” Fischer told IPE Real Assets.

“Detached, single dwellings had a significant run up in values post-COVID, and that segment of the market is now under pressure as a result of inflation and higher interest.

“Pricing of apartments has relatively flatlined, creating a gap between the two markets. We think there will still be a nice gap between apartment pricing – certainly in this project – and what the reduced house prices might be.”

Fischer added that this made the project an attractive proposition for the lender, particularly as some of the apartments had already been pre-sold.

He said the developer had purchased land some time ago and this had helped cushion the rising cost of construction and the higher cost of capital.

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