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Reflecting on 2020 Paul Howells CEO, Accumulate Capital


ooking back on this year, it is fair to say that investor confidence in property development finance has remained unwavering. In what was already a transitional period for the UK’s economy due to Brexit preparations, the pent-up demand from this and the lifting of lockdown restrictions earlier this year has seen property development go from strength to strength in 2020. The announcement of a national lockdown on 23 March set in motion a turbulent few months. This came in the form of an initial reduction to loan-tovalue (LTV) levels from institutional lenders on the high street, to align with the notes of caution with uncertainty abound. However, this was only a brief consequence, and we have since seen confidence increase. Most ‘go-to’ lenders have returned to the LTV levels experienced prepandemic. In relation to private investment, the demand has actually increased in the last quarter, due in part to the volatility of the stock markets and a desire for fixed income opportunities. It was odd, because from this point we saw two diverging responses. While some decided to reduce the risk and invest less, others decided to embrace the fluctuating market and capitalise on the risk. We have certainly seen an increase in involvement with property development finance from investors as it grows ever more attractive to those seeking to increase their capital by expanding into the property market. What was interesting was the shift in market dynamics; the buyers’ market was certainly a factor in the favourable pricing renegotiation for our Cheyne Walk project. There has also definitely



been a phasing out of the buy-to-let (BTL) investment scheme in favour of the high return and relatively lowrisk prospect offered by development finance. A fact that has remained true regardless of the onset of the pandemic. Another side-effect of the pandemic was the instantaneous shift to digital working. There was a need to rise to the infrastructural pressure of providing potential investors with the same level of involvement in our projects as a few weeks before. In other ways, this shift merely catalysed a movement that had been gaining momentum for years, with many companies, ourselves included, already working on a digital platform. If anything, lockdown enhanced the value of the systems we had already built to engage with consumers. Rather fortuitously, construction was not delayed or affected by the first lockdown, and we were able to continue as scheduled. The main challenge during this period was our inability to visit the construction sites and see their progression first-hand. It was not until the UK had passed the peak of the virus towards the end of May and into early June that market sentiment vastly improved. The lifting of lockdown on 4 July, with all nonessential businesses given the green light to reopen, saw a sudden boost to the housing market. This, coupled with

Development finance has many changes to come


the temporary holiday to stamp duty introduced on 8 July, released much pent-up demand for relocation. For us, and I am sure others too, we saw a large increase in enquiries for residential properties, especially from overseas buyers, and conducted a number of sales on the back of this. It also enabled us to return to site inspections, whereby our consumers and clients could visit our sites to view the reality of the development and the essence of the locations. In a safe environment with rigid social distancing in place, we were able to bring this ‘personal engagement’ back into our suite of services. What has become abundantly clear is the importance of this in maintaining investor confidence in the development finance process. The second national lockdown, brought in at the beginning of November, has followed similar patterns to the likeness of the first, with more virtual interaction and a huge increase in online meetings. As market sentiment began to dip in confidence again, the news of the first two vaccines to enter the final stages of trials provided a much-needed morale boost. We have seen a large increase in confidence levels from our investors and since the recent announcement provided by Pfizer, a four-fold increase in investment in comparison to the previous month, in half the time. The immediacy with which the UK government has prepared clinics to distribute the first doses of the vaccine to the most vulnerable, and the promise of a return to normalcy by Easter of 2021, has caused a surge in investment in property development finance. As 2020 comes to an end, we look forward to the many positive changes to come as distribution of the vaccines begins to make society safe again. The continued prosperity from investment in development finance – despite the economic challenges of this year – really does show its credibility as the wisest way to capitalise on the property market. B I www.sfintroducer.com


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Bridging Introducer December 2020  

Bridging Introducer December 2020