Property
Certainly it’s not just property companies that have loaded up on debt secured on real estate assets in the boom. Many companies outside of the property sector also took advantage of favourable lending conditions in a rising market, thinking perhaps this time it would last forever. Now that asset prices are falling, debt funding is becoming more difficult to find, or renew, and at greater expense – what can companies do to shore up their position?
Well, you could do worse than follow the example of the longest of long term investors, the life and pension funds. If for some of us this is the first, second or possibly third recession, for most of the life and pension funds the current situation is just another dip in the recognised property cycle that consists of peaks and troughs.
Many institutional funds are taking advantage of the quieter market to rationalise assets and secure planning permission to add value – value that should significantly increase once the market starts rising again which it inevitably will.
Think about the timing. If you’ve got the cash to invest, it can take 12-18 months to secure a planning permission, which you can then hold for three years before implementing it. If a conservative 18 month build programme is then required, if you start now and if everything progresses smoothly, completion could realistically be six years away. Plenty of time for the market to bounce back.
Looking at this from the other side, if you didn’t get involved in the property boom as the prices kept on going up, now that they’re some way off the peak, you might want to consider investing in your own premises. If it’s a bad time to be a seller, it’s a lot better being a buyer.
So, whether you own property and you need to shore up its value to avoid unfortunate balance sheet corrections, or you have spare cash, it could actually be a good time to look at property. Not as something to avoid like the plague, but as a realistic way of preparing for the upturn, whenever it may be.
Source: ‘Bricklayer’ is written by Martin Winch of M&N Communications www.mncommunications.co.uk
<- Back to Property list
Well, you could do worse than follow the example of the longest of long term investors, the life and pension funds. If for some of us this is the first, second or possibly third recession, for most of the life and pension funds the current situation is just another dip in the recognised property cycle that consists of peaks and troughs.
Many institutional funds are taking advantage of the quieter market to rationalise assets and secure planning permission to add value – value that should significantly increase once the market starts rising again which it inevitably will.
Think about the timing. If you’ve got the cash to invest, it can take 12-18 months to secure a planning permission, which you can then hold for three years before implementing it. If a conservative 18 month build programme is then required, if you start now and if everything progresses smoothly, completion could realistically be six years away. Plenty of time for the market to bounce back.
Looking at this from the other side, if you didn’t get involved in the property boom as the prices kept on going up, now that they’re some way off the peak, you might want to consider investing in your own premises. If it’s a bad time to be a seller, it’s a lot better being a buyer.
So, whether you own property and you need to shore up its value to avoid unfortunate balance sheet corrections, or you have spare cash, it could actually be a good time to look at property. Not as something to avoid like the plague, but as a realistic way of preparing for the upturn, whenever it may be.
Source: ‘Bricklayer’ is written by Martin Winch of M&N Communications www.mncommunications.co.uk
<- Back to Property list
