If you assumed that this year must have been a challenging one for development finance amid so much market and political volatility, in some ways you’d be right. Turn to our leading development financings of the year section and you’ll find that it remains a niche part of the real estate debt industry and that fewer organisations are providing information on their development financings – though it appears to be a rosier picture in Germany than in the UK at present.
Nonetheless, our list of key financings shows that this is far from a moribund market and it’s notable that the list includes some extremely large, eye-catching projects such as Hudson Yards in Manhattan and the major build-to-rent scheme near London’s Wembley Stadium. It goes to show that the most prime projects in the best locations are capable of withstanding whatever broader market difficulties arise.
Also in this end-of-year issue, we take a timely look at the Emerging Trends in Real Estate Europe report from PwC and the Urban Land Institute, which sheds some welcome light on recent developments and how things are likely to play out in 2017. Unsurprisingly, in the wake of the UK’s Brexit vote and the unexpected US election triumph for Donald Trump, investors are for the most part adopting “risk off” strategies. Indeed, the nature of today’s environment is neatly illustrated by the fact that 89 percent of respondents to the survey cited political instability as top of their list of concerns.
However, while the banks continue to face struggles and a further pull-back from traditional lenders is a popular forecast, this presents a clear opportunity for non-bank lenders (NBLs), with 64 percent of survey respondents anticipating that NBLs will increase their market share in the year ahead. Moreover, as mainstream bricks and mortar investment falls away, so support for areas such as student accommodation, healthcare and hotels is on the rise.
As we discover on p.10, one bank looking to the future with optimism is Natixis, the Paris-headquartered organisation that has made big strides over the other side of the Atlantic. We hear from senior executives in the bank’s US real estate debt team about why they continue to have faith in the CMBS market.
In addition, we have our annual France report, which highlights the shift away from core Paris; as well as our regular Investor Pricing Survey by Dr Karen Sieracki of KASPAR Associates, where we can observe in stark terms the weakening sentiment in UK real estate.
Enjoy the issue and have a wonderful festive season,