I would like to wish all of our members a Happy New Year and a very prosperous 2010.
So what has this year got in store for us all? Well it is the time of year for forecasts so here goes, my predictions for 2010 are:-
- More optimism generally, more banks returning to the market, some new lenders will emerge and there will be more appetite for new property lending than in 2009. More lenders will be willing to lend £50m or more on new investment transactions backed by prime assets. However, we will continue to see a shortage of prime deals to satisfy this increased demand.
- Increased lending activity will result in slightly higher LTVs and slightly lower margins, but definitely not a return to the levels seen at the peak of the market.
- I also think we will see the return of the pre-let development market in the City and that the shortage of Grade A office space will tempt a few lenders into financing developments again, but only for very experienced operators.
- Interest rates will rise but not as quickly as the market is anticipating. Interest rate caps continue to look a good option...
- More CMBS issues in special servicing. Foreclosures and the number of banks selling distressed assets will increase compared to last year as more lenders get to grips with problem loans and see an acceptable exit position on the horizon, particularly in relation to prime/good secondary properties. However I do not expect to see a huge increase in the sale of distressed assets. Many work outs and active management scenarios will take a considerable time to take effect and many lenders will be forced to take a longer term view on recoveries as the UK economy 'bumps along the bottom' without much improvement over the course of the year.
- Everyone getting sick of the General Election and all the political posturing by March...
- Finally, England to win the World Cup in South Africa this Summer! It must be time surely...
Look forward to seeing you at our events this year
Andrew
