Henry Stewart

Henry Stewart conference: Lenders look to alternative asset classes and areas

Last week saw a mix of property developers and finance providers come together to discuss the state of the property market.

The Henry Stewart Property Finance briefing discussed a range of topics ranging from new entrants into the property finance space to the impact Brexit will have on the UK real estate market. 

Attendees heard from 18 active frontline property experts, with James Bloom, managing director of development finance at Masthaven (pictured above), chairing proceedings. 

The day started off with a number of reports looking at who was lending and what areas of the property market were performing the best. 

In the afternoon, the focus shifted towards the future of the property market with a look at new types of finance, such as crowdfunding, challenger banks and peer-to-peer lending. 

How is the development finance market changing?

James began by addressing the current landscape of the property finance market and pointed to the emergence of a number of specialist banks and lenders. 

“For far too long, traditional lenders have been able to dominate the lending landscape, often at the expense of customers, who at times have had to accept [a] sub-standard and heavily depersonalised service. 

“Traditional lenders are having to massively up their game to keep pace with a new breed of lender who [has] put the customer at the heart of their procedures and policies. 

“Human banking in a digital world is the order of the day and those who don’t adapt will find themselves left behind in the wilderness.”

Ashley Ilsen, head of lending at Regentsmead, looked at new entrants in the development finance space. 

Even though he admitted that banks and challenger banks still dominated the space, Ashley pointed out that the alternative finance sector was continuing to grow.

“I have also included peer-to-peer funders as a slightly different group as they are becoming more prominent now.

“Crowdfunding is happening in the development finance market and that is something that hasn’t really been tested. 

“It’s been tested in a good market, but hasn’t been tested in a bad market and is still very much in its [embryonic] stage, so it will be interesting to see how that develops over the next few years.”

As a result of new lenders entering into the development finance space, Ashley added that some lenders have been looking to move away from ‘safer’ geographical areas, such as the South East, and are targeting places further north, including Scotland.

“Some development lenders are dipping into Northern Ireland as well, which is [a] place that has been neglected, particularly since the last market crash. 

“What we are seeing is the by-product of more lenders coming into our sector, therefore, other lenders have been forced outwards, perhaps into areas which [they] are more uncomfortable.”

Nitin Boodhun, associate director at Arcadis, told attendees that lenders were also looking at alternative asset classes, which were becoming more popular to back.

“Things such as warehouses, industrial units, student accommodation and, to [a] certain extent, hotels are becoming strong asset classes that funds and funders are looking to back. 

“This is shifting the focus away from traditional asset classes and there is an emerging trend around the likes of student accommodation which are actually being owned by funds. 

“Funds are focusing their attention on leading the development of sustainable commercial offices and also backing prefabricated housing supplies in terms of [what] the future of the construction industry is going to look like.”

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