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Category: Development Finance News

property markets

Subdued Property Markets – Developer survival

According to the Royal Chartered Institute of Surverys (RICS) demand for residential property continues to decline. The number of homes that have come onto the residential have increased gradually. This however has been credited to the offloading of some buy to let properties. Although supply is not significantly out of balance with demand, the subtle changes in the market over the recent years show that the residential property markets remain subdued. Despite the increase in stock levels with Estate agents, the supply of new properties on the market remains at an all time low.

Property Markets – price growth, but demand declines

It really doesnt make sense to develop new properties when demand is dropping. Or does it? With demand for rental properties holding their own and a drop in landlord instruction, rents are going up. Consequently even a relatively short term stint as a landlord will pay off. This is true despite the loss in tax breaks for individuals. Developers that have residential property that has become hard to shift because of the lull in the property markets, could consider becoming landlords for a short period until the market develops some buoyancy. As a limited company they will still enjoy many of the tax breaks available.

Timing is the key

The capacity to time the upsurge in new demand often determines the success of a property developer. Growth and Shrinkage in property markets ebb and flow with economic cycles. Those developers that have been in the business for the long game understand this and are unlikely to consider slow moving development stock as a heavy burden. If standing stock that is providing some return, waiting for the next upturn means they will have it ready when demand returns. In the interim the property that they have on the books could be used as collateral to develop commercial spaces which are new in demand. This is especially true for shared workspaces and warehousing.

It isnt expected that the property markets are going to pick up toward the end of 2018 either. More likely is the possibility that they will remain subdued as we approach Brexit D-day early next year. The uncertainty of how the economy is going to perform post Brexit is definitely one the factors that add to the subdued property market.

Flexibility and diversity

Ultimately survival is the flexibility to diversify as rapid market changes take place. For some developers sitting on unsold stock may mean that they worry about not having the cash flow to start a new project even in a different property market. When this happens, its time to to an experienced broker such as Sam Hoban at Belgravia Property Finance. Sam has extensive knowledge and experience. He posesses an understanding of how to source financial different products to resolve different situations. Specialist brokers like him have the resources to deal with most property deals.


property development funding

Property Development Funding alternatives for industry growth

Property development is driven by economic growth. Ironically property development also drives the economy. healthy economies are able to sustain this growth. Its when there are catalytic changes that create uncertainty that property development funding experiences problems. Whats more, is that some development projects can take years. When unpredicted catalysts change the face of the marketplace radically, property development funding that is staged can face risks.

Types of Property development funding

The property development market experiences slumps and growth in line with other economic indicators. Property developers that prepare for economic fluctuation are the ones that survive them. The way that they access property development funding will different based on the prevalent economic climate. Few developers will ever seek funding from high Street banks. It does happen, but most developers will seek out traditional resources to the industry. This usually includes private lenders and specialist businesses that lend based on high returns. As the online funding tech age advances and develops greater maturity crowd fuding and online funding resources have started to emerge.

Alternative Funding resources

Alternative funding is something that both new and established developers look for. Choices in funding will be based on accessibility to traditional funding, the availability of traditional funding and the state of the market. Investors that understand economic cycles are sometimes to prepared to wait to enjoy a return. There are different kinds of development funding available.

Because every project is going to be different the approach to obtaining finance will be different too. If the property for development is going to purchased at auction, then seeking out auction finance will be a critical factor.  Usually the developer will have only 28 days to settle the payment after the hammer has fallen at auction. The developer will usually have a good idea where they will get the finance and may even be able to obtain a decision in principle. By approaching a reputable broker before the auction, a developer will be able complete the process more quickly.

Multiple sources

Larger developments typically involve multiple sources of finance. These include inter alia, auction finance, mortgage finance, mezzanine finance and Bridging loans. Finding a broker that can source all of these types of funding is important especially when time factors influence the success of the deal.

Although crowd funding is becoming more popular, it is advisable to seek the advice of an experienced broker. There will be projects that this type of funding is appropriate for. There will be projects that can integrate crowd funding and mezzanine finance or possibly crowd funding and mortgage finance.

Speaking to an experienced broker such as Sam Hoban at Belgravia Property Finance, developers are able to determine the best route to take. It is important to get professional advice before a development project is launched , however should the project experience additional funding needs, professional brokers can help close the gap.

Scottish property Development Finance

Scottish Property Development Finance Continues Unhampered

Brexit is the big word and will continue to be for the foreseeable future in terms of property investment. It doesn’t seem to matter what is being explored and discussed, when the Brexit word enters the conversation, eyebrows are raised.

It could be anything from Scottish property development finance to bridging loans in Scotland, because Scotland is part of the UK, the Brexit uncertainty cannot be avoided.

Despite enjoying a different legal system and buoyant property market, Scottish investors still watch quietly as the Brexit negotiations play out. Those who are in the know, however, have indicated that Scotland will weather the property development finance issues and come out the other side without being the worse for wear.


Optimistic About Scottish Property Development Finance

Optimists abound when it comes to property development and it’s worth looking at who the real optimists are. After all, can they all be wrong?

There are several visible changes that have taken place in Scottish property development and the money exchanging hands within this industry too. Despite the attention it has drawn, few have indicated that any of this is harmful.

Until recently, Scottish property development projects have attracted a significant proportion of investors from abroad. Overseas investors dominated the market during 2017 and continued to do so during 2018. The Brexit word certainly didn’t scare them off.


Changes in Corporate Tax Relief

There have been some concerns that since the chancellor has moved to scrap corporate tax relief for foreign property investors that interest would wane. The expected drop in Scottish property development and the related property development finance has not happened.

What is also happening is that UK investors are looking north once more. Probably because they expect to enjoy better returns on their investment and get more bang for their buck.

Miller Matheson, executive director of CBRE, has made his views clear. In Scotland, the market has developed a resilience in remaining buoyant despite the “cloud of political uncertainty” for years. This has meant that the concerns over Brexit have not made a material difference to the investment climate north of the border.

While director of the Scottish Property Federation, David Melhuish, pointed out that the wider issues on Brexit were “too clouded for a real picture”,  Mr Matheson points out that this is unlikely to make an impact of note on the market.


Property Development Finance – UK-Sourced

What is interesting, though, is that there is an upsurge in funding from within the UK. Effectively, money from within the UK is now entering the property development market in Scotland. This could be the crucial factor in growing the market when changes to tax benefits for overseas investors become a reality.

Scottish property development finance is beginning to originate from with the UK.  And it’s growing. This development is potentially going to become the bedrock on which future project funding is built.

The property development industry in Scotland has been heavily influenced by foreign investment. Consequently, many will see the changes as an opportunity for new UK investors. Property development finance is available through highly skilled professional brokers.

High street lenders and mainstream lenders are making funds available for this market. A good property broker will, however, be able to guide new Scottish property development investors. Alternative financing, if it is needed, can be sourced.


Finding the Best Broker

Belgravia Property Finance has extensive experience in sourcing excellent private finance deals, with specialists able to assist in Scottish property development finance and bridging loans. Always seek out an experienced and reputable broker such as those at Belgravia Property Finance.

When investing in property development, it is best to ask a niche specialist. For development property finance you can rest assured that the consultants and brokers at Belgravia will be able to guide you, especially to find the right bespoke arrangements for you.

Irish property development financing

Time Is Ripe For Irish Property Development Financing

There is so much going on in the Irish property world that it is quite difficult to know where to start. Barely two months into the year and the Irish property journals, blogs, and newspapers are all brimming with a positive outlook.

Irish property development financing is now a viable short and medium-term investment. That doesn’t mean that there are no problems in paradise, but overall, Irish property is doing well.

All the activity, growth projections and the Government announcements relating to infrastructure investment indicate that Ireland is the place to be at least for the next decade.


Faith in the Future

When the government puts forward its plans to make a substantial dent in the housing shortage, things begin to change. This is exactly what has happened in Ireland.

Towards the end of 2017, the Bank of Ireland announced that it would be providing €1bn for property development in the Republic. This kind of approach fuels the optimism in the market countrywide.

This is more than four times more than the €250 million that was made available in 2014. Definitely signifying a substantial shift in development confidence.

After the tracker mortgage debacle, the Bank of Ireland has continued to identify accounts that will enjoy redress. This means that 14,500 customers have now been identified as having been impacted by the problem since 2010.

And an additional 6,000 customers having been identified for redress. This shows that there is good faith in the property industry and the banks are working hard at said redress.

The bank has now adopted a policy where proper home building strategies will be encouraged and financed, rather than the land hoarding of the past which may have contributed to stagnation in the property development industry.

Property development financing has already included the financing of over 3,500 housing units and 1,500 student beds. They have clearly positioned themselves to grow this area of their portfolio.


Government Investment in Infrastructure

The Irish government has allocated a €116bn investment into future infrastructure including housing, health, and environment. This has been planned over the next two decades.

Private industry is therefore taking the cue for a surge in the market. With the knowledge that new infrastructure will be built by the government, private business is now prepared to get on the bandwagon.


Dublin – Roads Paved with Gold

Recent figures indicate that Dublin commercial rents are now as much as six times higher than they are elsewhere in the country. They are also rising and expected to reach an increase of between 5% and 6% during 2018. Prime industrial rents are expected to rise by as much as 7% across the capital.

During 2017, there was a record uptake of commercial property leasing, especially offices, indicating an increased demand. The domino effect that can be expected from this is a kneejerk reaction coming from industry to prevent a shortage and any related crisis this may precipitate.

The jury is still out on whether office space will continue to be scooped out or whether vacancies will increase. Property professionals don’t agree on the details. Quality office accommodation is expected to increase in demand even if overall occupation decreases.


What This Means For Irish Property Development Financing

The ongoing growth in the Irish property market has been fuelled by government investment. This is an indicator that development opportunities will abound over the next few years. It can be expected to continue almost certainly for the next decade.

Catapulted by the government’s commitment to invest, Irish property development financing is likely to become a catalyst for the privately funded market.

Access to investing in the Irish property development market does not need to be difficult. Sometimes, when gaining access as a UK investor, hurdles can be experienced. It doesn’t really have to be once the property development financing has been arranged.

This is usually sourced and managed by an experienced, resourceful, and reputable broker or financial advisor. Belgravia Property Finance has an excellent network of both investors and financiers who offer private finding. Whether you are looking for a mezzanine loan, Irish property development financing, or Irish bridging loans, Belgravia are the people to speak to.


Development Finance – How Flexible and Remote Working Influences Commercial Property Growth

Over the last thirty years and, more specifically, the last decade, the way people work has changed. Telecommuting has become an everyday feature of working life for many.

Businesses have developed to the point where many of their employees may come into the office once or twice a week. There are many businesses that never see their employees because all work is conducted remotely.

The surprising thing is that this will not reduce the demand for commercial office space. In fact, this trend may very well increase the demand for development finance as commercial leasing models change.

Remote work models are now implemented by so many businesses that it is estimated that half of the UK workforce will work remotely by 2020. Many telecommuters are treated as working from home.

The truth is, however, that many of them do need to use office space sometimes as frequently as once a week. Remote workers may still need to meet with clients or conduct a meeting that involves a group on a regular basis. Companies still need to provide training for their employees. Office space is still in demand.

While businesses have reduced the square feet they use in their offices to accommodate employees, space is still required for remote and flexibly contracted staff.


Development Finance For New Commercial Business Models

New business models are growing in the commercial leasing sector, which means more flexibility both for the lessee and the lessor. Lenders are finding themselves having to look at new models when considering development finance for new developers. The viability of long-term commercial leasing has reduced, and even large companies have recognised the shrinking need for office space at a single site.

Both leasing contracts and the office design needs that come with them now need to be innovative. Businesses leasing office space need flexibility and adaptability. They also need to have the flexibility to make changes to how much space they need. This, both in terms of growth and shrinkage.

New developers will find themselves having to take into consideration how the need for flexibility will impact on the development itself. Ability to remodel the interior of a building easily has become a critical deciding factor in more recent commercial leasing. These will all have to be considered when presenting the business model for development finance.

Companies such as Regus have seen this model developing for years and have become well placed to accommodate the changing market. They have created the capacity to hire an office space from a few hours to several years. Just because not everyone commutes, does not mean that they do not need an office or workspace.


Shared Workspace

The changing face of commercial accommodation has further been cultivated by the culture of shared and open workspaces. Commercial vendors can increase their income by hiring out short-term space in volume. Startups and single owner businesses have recognised the need to use commercial spaces to meet with clients and to present at meetings involving several people.

Despite the convenience of working from home, a commercial office space is still needed by these people. Interestingly, some models work well where the lessee pays a monthly rate whether they use the space or not. This shores up and potential losses for the lessor, while keeping the space open for ad hoc space hirers.


Multiple Locations

As developers build a portfolio of commercial space, they can find themselves leasing space to the same lessee across multiple locations. This can only happen with flexibility and a change in business model. Meeting this flexibility will need to happen in both commercial leasing and commercial building ownership.

The need for development finance will certainly not change. Rather, it is more likely to grow as developers adapt to the changing work models. Developing environments that grow with changing working patterns means that commercial property developers have a huge scope for profit.

Finding development finance that fits with your business model can be a daunting task. Especially in a rapidly changing world. At Belgravia Finance, you will find all the expertise and support when seeking out funding for your project. For a professional and confidential discussion call now.


Property Development Finance In A Flatlining Market

For most property investors, flatlining property prices can be a sign of a tough road ahead. But is the current slowdown in the market expected to be a longer-term trend?

The Royal Institute of Chartered Surveyors (RICS) have identified that although the market continues to flatline, there are still some positive signs. Those seeking property development finance will not have to withdraw from the investment market. They may, however, simply have to change their approach.

The flatlining trend is clearly visible in London, East Anglia, the North, and North West. Growth, however, continues in Scotland, Northern Ireland, the South West, and the North West, development activity is picking up in the Republic of Ireland, so we see a demand for property development finance and bridging loans in Ireland.

Flatlining markets appear to be doing so because of a significant drop in both demand and property availability. Over the next year, RICS expects prices to rise again, except in the capital.

Landlords investing in the buy-to-let market are being squeezed out of the market. Changes in mortgage interest tax relief and stamp duty on properties have influenced this squeeze.

Direct Line conducted research indicating that landlords are paying more on stamp duty. In fact, as much as £6500 with every additional property they add to their portfolios.


Buy To Let Will Not Die Out

All of this, however, does not mean that investment in property will end. It will simply change to adapt to how the market is behaving.

After all, if landlords are going to exit the market, are they going to shed the properties they already have in their portfolio? And could this possibly stimulate the sales market?

The rental market is likely to increase because the availability of sales stock is so low. Therefore, investing in rental property for the long term appears to be a valid investment option.

While the value of the property may not increase substantially over the next financial cycle, the value of rents are already rising. Thus, the return on the investment becomes immediately tangible.

Just because property values are flatlining, it does not mean that a good return cannot be achieved through rental income. If the investment is being pursued for a quick turnaround then seeking out economies where property prices continue to rise is the better alternative.

Property investors may decide to move their focus to areas of the country where the sales market remains buoyant. This will mean that they will still be able to invest in development property where values continue to climb. They can do this while still enjoying excellent returns on the rental market. Even in the event of a slowdown.


Property Development Finance

Investors that are purchasing for property development will naturally look to trends where prices continue to rise in other parts of the UK and Northern Ireland. The overall economy may look rather bleak at times.

In fact, it is the micro-economies of other parts of the UK that will determine whether local investing remains viable. When an investor can still draw a decent return from a development in the North West, then this will be an explorable option.

Seeking out and obtaining property development finance may require some ingenuity. This is why you will need a top notch broker.

Property investors in the UK, however, do not have to invest nationally. They can and do look abroad for other opportunities. This would mean that borrowers will not be able to use retail banks and other mainstream lenders to obtain finance.

Property markets abroad are also influenced by local economies and, depending on the type of investment involved, is a good route to explore.

The good news is that there is property development finance available from lenders that offer finance outside of the retail lending market.


Identifying The Objective Of The Investment

Overall, identifying the objective of the investment will lead to the correct decision about whether to invest or not. This means that properties in a flatlined market can still provide a return. Don’t forget that property markets do not flatline forever either.

How you decide to finance the investment will depend on the length of the investment. It will also depend on whether the desired outcome is a long or a short-term return. This determines where the investment is made, the kind of project involved, and, of course, the way it is funded.

Belgravia Finance Brokers are experienced property investment advisors and brokers. They will be able to assist and advise on everything related to your property investment. From high net worth mortgages to bridging finance and property development finance, Belgravia has the experience and expertise to support you.


Government Urged To Launch Regeneration Development Finance Fund

The government has been urged to launch a regeneration finance fund in the UK to help promote redevelopment.

Centre for Cities, a research group, has argued that government spending cuts and a dip in private sector investment have left a gap in commercial development finance and that fresh input is needed to kick-start regeneration in city centres.

Centre for Cities says a regeneration finance fund from the government would boost development such as offices, houses and other projects which would generate jobs.

Urban development finance funds are now available but only in certain areas of the UK – only half of British cities are covered so far and some argue that the funding is “patchy”.

In fact, some of the UK’s major cities don’t yet have access to the funds but could benefit from redevelopment finance – these include Newcastle, Leeds, Birmingham and Bristol.

The report suggests that the funding pool could be made up of European funds, public money and investment from the private sector. It says that traditional grant funding could be used alongside the regeneration finance to boost redevelopment.

Alexandra Jones, chief executive of Centre for Cities, said, “A new national urban development fund would offer Government a way to invest in development finance and regeneration our communities need without increasing net public sector debt.”

She added, “As the Chancellor looks for innovative ways to balance the books before the spending review this summer, a national investment fund could offer a complementary approach to traditional grant funding to support local development.”

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