Product category:
Surveyors and consultants
News Release from: EC Harris | Subject: New service for UK property market
Edited by the Buildingtalk Editorial
Team on 14 February 2008
Increasing returns in challenging
property market
EC Harris has launched a new service to offer investors greater certainty of returns in the UK property market.
The 'credit crunch' has led to fears that the US experience of increasing bad debts recorded by the property lending banks could be repeated in the UK The new service, as featured in the Financial Times (January 2, 2008), will initially focus on distress avoidance and project recovery
This article was originally published on Buildingtalk on 21 Jan 2005 at 8.00am (UK)
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In the event that this is not possible it will focus on finding solutions to complete property developments, either by repackaging and selling on, the introduction of another developer or managing the completion of the development and its sale on behalf of the fund.
Matthew Cutts, Global Head of Lenders and Investors for EC Harris, said: "We estimate that there will be a 20-25% increase in development projects outside the top tier developers defaulting to the extent that the banks will have to step in and take an active role in the project recovery to best recover their debt.
"Our approach is to consider and weigh up with the client all the options available for the project in question, with that client's drivers ever in mind, not adopt in advance a prescriptive attitude.
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Our emphasis is if possible to allow recovery of the project with the minimum of disruption." Potential clients for this service are expected to be the main clearing banks, secondary and merchant banks, insurance and pension funds, plus key investment decision makers, such as solicitors and accountants.
Industry experts have suggested that the UK real estate debt in distress rose from around GBP1.3 billion to GBP4.5 billion in 2006 and is set to increase significantly again this year.
Rising costs and falling values are putting borrowers central loan-to-cost and loan-to-value covenants at increased risk of default.
It is also expected that the reduced liquidity in the financial markets will increase sensitivity to distressed debt, which will mean lenders will be keen to avoid marginal loans going into default.
"We have diversified into the distressed debt and project recovery market to create a counter cyclical workload.
This will assist in providing our clients within the lenders and investors sector with a more diverse and sustainable offering in markets exposed to property lending banks that may be experiencing defaults", added Cutts.
The initiative will be an integrated solution based service that will involve other EC Harris specialist resources to meet the needs of investors.
It will be led by Partner Martin Cannon with John Willmoth providing day to day support in the area of project audit, and recovery and distressed debt.
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