Welcome back to the New Year
And what a strange start is has been to the year with
the extreme weather conditions causing so much disruption to many people throughout
the country.
Many will share the sentiment of being happy to see the back of 2009 although we
were pleased to see what we considered a steadily improving environment as the second
half of the year progressed.
We and our developers certainly saw an improved property sales market with a flow
of sales and even a modest increase in values achieved in some areas. This took
some commentators by surprise when viewed in comparison to the barren sales scene
of the preceding twelve months or so.
However, we were keen to remind developers that one must be careful to remember
the year on year statistics reflect a comparison with sales volumes that were at
an unprecedented low point in 08 and early 09. So whilst the improvement was undoubted
it still left the market short of what one may consider a more “normal” market –
whatever that may be!
Likewise, from a funding perspective, we saw a gradual but definite improvement
in availability of senior debt being offered from a growing number of lenders who
recognised from mid ’09 the value in building a “new” loan portfolio of appropriate
quality projects. These new loans are based purely on current values and with generally
improved level of profit margin compared to historic transactions.
To reflect this attitude, we continue to be very active through provision of mezzanine
funding from our Strata Fund and have lent or committed to a substantial number
of new projects over recent months. All these continue to reflect our desire to
be supporting “best in class” projects in terms of experience and track record of
developer, location, design and specification of product proposed and strength of
market for such units.
As a result we are pleased with the continued performance of the loan portfolio
to date and remain committed to growing Strata to become a major force in the mezzanine
finance market.
In addition to the lending we can offer through Strata Fund, we are pleased with
the continued benefits Davon can provide clients in terms of structuring all forms
of funding for their property projects. The strength of relationships we have with
a wide range of lenders, investors and joint venture partners allows us to advise
on most funding requirements for property projects in the UK.
There clearly are substantial concerns over the general economic circumstances and
a lot remains to be seen in terms of how the New Year unfolds. However, all the
key indicators have shown a steady improvement in the sale values and transaction
numbers over the last six months and the mortgage market appears to be continuing
to improve in terms of availability of funds.
With the continued constraint on supply of new properties and some continued improvement
in buyer confidence and general sentiment, it is feasible that 2010 should see a
steadier year for the property market.
We trust the gradual thawing of weather conditions is reflected in a gentle warming
of all things property and finance to ensure that all of us in the industry can
look forward to a positive and successful 2010.
We look forward to continuing to assist not only our growing family of established
developers and borrowers but also to welcoming newcomers. We remain committed to
providing a professional and efficient service to all.
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