The development finance market is expected to bounce back this year, property experts have claimed.
Following a turbulent few years for the construction industry, a number of alternative property lenders now believe that the property development market is recovering, thanks to stabilising interest rates and lower inflation.
Daniel Austin, chief executive and co-founder at property lender ASK Partners, believes that a “very gradual” recovery will be seen in the property development market this year.
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“It is going to take time for the deals that were done in the 2019-2022 period to get through the system,” he says.
“We have hit the bottom of the market but we need some real drivers to get us off the bottom. The next government needs to capitalise on this, incentivising development, and lifting planning restrictions.”
Meanwhile, Jacky Chan, head of investor relations at Shojin, said that high demand for new housing and a lack of existing housing stock makes the UK property market particularly attractive for investors.
“We need around 200,000 new homes on top of what we have already,” Chan said. “So the fundamentals are really strong.”
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Shojin recently reduced its minimum investment threshold from £5,000 to £1,000 to enable more retail investors to access the investment opportunities in the UK property market this year.
ASK Partners’ Austin added that the property development finance space has changed considerably over the past few years, but he believes that the market is now adjusting to the new economic norms.
“We are in unprecedented times,” he said. “There are situations where sponsors have used half their dry powder to keep their positions alive but now are at a point where they are considering selling rather than putting good money after bad. They could sell and buy new at a cheaper price.
“No one can afford to sit and wait but we’re not yet hearing of major distress stories. I think the market is evolving around the economic situation.
“The way the capital stack is now carved up is very different.”
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