Debt market is motoring but is it going too fast?

Deloitte’s London Office Crane Survey showed construction has grown by 24% in just six months - indicating that the acute shortage of space has finally provoked a response. One of the first companies to undertake a meaningful volume of development since the crisis has, of course, been Land Securities, which is now reaping the rewards. This week, it revealed a £2bn increase in the value of its portfolio in results that beat even the most optimistic forecasts. No wonder Rob Noel has little time for analysts who said he was mad when Land Securities pushed the button on its speculative development programme and are now berating him for being too conservative.

The De Montfort property lending report also paints a picture of a market speeding ahead at full throttle. It is a far cry from 2009 when the industry’s £225bn debt mountain was splashed across Property Week’s front page and the question posed was: “Is property on borrowed time?” This year, almost every measure points to a healthier market. The value of distressed debt has more than halved, the variety of lenders in the market has increased and most importantly, lenders are ramping up their lending to developers and investors.

“High octane” was the phrase used by Chris Holmes, JLL’s head of EMEA debt advisory, and although for now it looks as though we are still some way off bubble territory, we need to take care not to repeat the mistakes of the past.

Another concern is how uneven the recovery of the lending market has been. The number of lenders willing to provide loans of less than £5m is almost half the number prepared to offer £100m+ loans. So for big-ticket London investments, debt is cheap and easily available, but in the regions, sourcing finance remains a problem. For all the talk of a northern powerhouse, it certainly won’t help if the lenders don’t put their money where development mouths are.

From devolution to diversity

Just as there are fears the debt market is too heavily focused on one part of the market - namely London - so too are there concerns that property remains too focused on one type of individual - namely pale and male.

There are glimmers of hope. The sight of The Collective’s Reza Merchant deep in conversation with Urban & Civic’s Nigel Hugill at last week’s RESI Awards was a welcome one, and indeed, it was encouraging to see so many other young people, and women, at the event - still not enough of course, but more than a few years ago, and people at the very top of their game to boot, as you would expect at such a high-level event.

So is there cause for optimism? I think so. When Property Week launched Open Plan last June, it was a month before I joined and I admit I was taken aback by the sheer scale of the team’s ambition. This was a campaign that eschewed the usual easily achievable goal and fixed timeframe for a raft of ambitious targets that we would, gulp, be pursuing over the “coming months and years”. We also launched a manifesto that we asked our readers to refine. Cue lots of watering down, empty promises and pats on the back for good works not done, I cynically predicted. How wrong I was. The campaign has prompted genuine soul-searching in an industry all too aware it is not as inclusive and welcoming as it should be.

This February, we launched our Diversity Charter. I urge all of you who have yet to do so to sign up. Next month, we will reveal what Open Plan has achieved in the past year - but it will not mark the end of our campaign, merely the end of the beginning.