At a breakfast summit hosted by the British Property Federation and global agent Jones Lang LaSalle as part of the UK Country of Honour Programme, delegates heard that while the global credit crisis had taken its toll, the property industry had found its feet in prime markets such as London.
However, greater partnership working, between banks, developers and local authorities, would be needed to kick start growth in many regional markets, with government’s reforms of planning and local authority finance seen as key to enabling the UK to create a strong, private sector led recovery.
Chris Grigg, chief executive of British Land, which has started London’s largest Central London office development programme to deliver 2.2 million square feet of space by 2014, told the seminar that the key question for all property companies, while banks remain cautious over lending, is whether or not they have the balance sheet strength to commit to development projects. Many financially strong property companies have already committed to significant development programmes.
‘If we look beyond London, planning restrictions are certainly limiting development, particularly in out of town retail, but extension and repositioning are still providing opportunities. At British Land we are seeing occupiers increasingly ready to commit to good space in good locations, and as this tenant confidence returns we hope banks will increase their exposure to the sector and to development,’ he said.
This development finance is still available, said Steve Sprigens, vice president, Real Estate EMEA, Barclays Real Estate, but increasingly depends on clients’ long standing relationships with banks as practices return to their core fundamentals, namely long term, broad based relationship banking.
'While the market is experiencing challenging conditions, Barclays Real Estate still views property as a robust and sustainable asset class with significant opportunities for growth under the right management. Therefore, we continue to build long-term relationships with experienced real estate professionals across a broad base of products and all sectors of the real estate market,’ he said.
Reforms planned by the UK’s coalition government will also be key to unlocking regeneration, said Liz Peace, chief executive of the British Property Federation. ‘While lending to the property industry remains constrained it is vital that developers and local authorities are freed to find innovative solutions to promote growth,’ she said.
‘For these partnerships to take hold, councils must be given the right tools to create the physical and social infrastructure needed to unlock development, whether through new funding tools or the greater localisation of business rates,’ she explained.
‘Communities must also be given the right incentives to accept development, within a planning system that has sustainable economic growth at its heart, if ministers are serious about creating a private sector-led recovery,’ she added.
Offering a view from the US, Michael Zietsman, managing director and head of Capital Markets, West Region, Jones Lang LaSalle US, said: ‘The debt markets are just now beginning to open back up for development projects in the United States, but only for those with strong sponsorship and a high degree of pre-leasing commitments.
‘We do not expect to see any speculative development in the industrial, office and retail sectors, for the most part, commencing for another 12 months at a minimum. Thankfully, developers in the United States recognised the need to halt new construction in the downturn and that low level of new supply is now helping to heal the commercial real estate markets,’ he added.
