Partner Article

Credit crunch kills off speculative property development

Property developers are being warned that speculative schemes are now a thing of the past.

Property expert Kevan Carrick, of Newcastle-based JK Property Consultants, will tell an audience of investors and developers at the North of England Property & Business Show in Leeds on Wednesday that the credit crunch has completely transformed lenders’ attitude to risk.

Carrick said: “There will not be much money around for new schemes this calendar year but funds should become available next year and improve further in 2010.

“The credit crunch will continue to have a significant impact on the property market for years to come. Investors and developers need to be aware of the changed landscape and be more innovative in their approach if they are to get developments off the ground.

“The pace of development will slow further but if there is an occupier taking the whole or a substantial part of a development, that scheme is likely to proceed quickly. If not, there is little or no chance of raising finance.

Mr Carrick, who is also policy spokesman for the Royal Institute of Chartered Surveyors in the North East, said that developers needed to work more closely with local authorities and regional development agencies.

He continued: “It is more likely that during this period more joint ventures and Special Purpose Vehicles between the public and private sectors will emerge. This will also bring forward some innovative financial models by which to achieve successful regeneration schemes and development projects.

“RDAs will seek to reduce the risks of development and make things easier to ensure that a regeneration scheme is more attractive to the private sector.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .