What feels like the first hint of Spring has arrived with some warm sunshine coming through the open window as I write. However, as we all know in the good old UK, it could quite easily be back to a cold, grey, rainy day by tomorrow (or even later today!).
One can draw some analogy between the changeable weather and the state of the economy and property market, or more specifically the sentiment that controls it.
For it is indeed how people feel and the choices they make that makes a market. This has been well documented by many authors and commentators, none more eloquently than Sheena Lyengar in her book ‘The Art of Choosing’, a hugely informative and very enjoyable read, well worth buying for your next holiday.
With so many variables in the market and the wider economy, sentiment is prone to fluctuate almost as quickly as the British weather!
Within our small part of the property market, an examination of our portfolio of loans across the country showed a very slow start to the year in terms of sales of completed properties but there has been a progressive pick up in sales achieved from February onwards.
These sales have covered many areas of the market both in terms of geography and value including high value single units in London, town houses in Plymouth, barn conversions in Warwickshire and apartments in Bournemouth.
In overall terms, we believe that the long-standing principles of development remain true in that units that combine the right design in the best of locations, finished to a high quality and standard of specification and most critically, priced correctly, will continue to sell.
We are seeing perhaps a more “normal” sales market and it is important that developers and lenders alike review new schemes based upon not only realistic and achievable values but also appropriate timescales to achieve completed sales.
It remains vitally important that developers have the most appropriate funding structure in place for their schemes and are working with those lenders that have the depth of experience and understanding of the property market. This ensures that they are an asset to the development team and not a potential liability.
Indeed, whether we are purely structuring funding for a client or providing a mezzanine facility to them, we strive to ensure that all parties involved are the most appropriate for the individual transaction. We continue to favour working alongside debt lenders with not only the requisite depth of experience but also with whom we have a strength of relationship that can provide confidence that all parties will work together towards a single aim.
We find that having the ability to provide mezzanine finance of anywhere between £100,000 and £2.5m per transaction, on a highly professional and most importantly reliable basis continues to prove a great attraction for developers.
Knowing that a lender will perform as expected at the required moment is of course key and our borrowers know that as a lender we have never failed to deliver the funding agreed, even in the most challenging of economic conditions.
The first quarter of 2018 has been a positive one for Davon with a very healthy flow of new transactions from both existing clients as well as a continuing stream of new parties and we look forward to continuing to assist clients with navigating what can be a confusing funding market.
We enjoyed another successful MIPIM in Cannes and our regular Wednesday evening event proved a great success, hosted for the fifth year running with Jackson Stops and BLP Insurance. It was good to see a healthy attendance from a wide cross section of people within the industry. We firmly believe that MIPIM continues to have great benefits in terms of re-enforcing existing relationships as well as forging new ones and already have next year’s event firmly in the diary.
So, despite BREXIT, US trade sanctions, Russian spy poisoning and the many other global challenges let us welcome the warmth of spring and continue to play our individual parts in delivering the much-needed new homes to the market.
We at team Davon look forward to continuing to work closely with our clients, existing and new, in structuring and providing the finance needed for projects.
Enjoy the Spring and the warmth it will bring!
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