Fund manager Managing Partners Limited (MPL), which runs the British Property Opportunities Property Fund, says that a growing number of property developers are facing funding problems on new projects because their banks are freezing their lending until they can demonstrate a certain level of off-plan sales.
Through its British Property fund, MPL is helping property developers overcome this difficult situation by offering to buy some of these properties off-plan. Around 50% of the properties currently being considered by MPL are off-plan on new developments.
Jeremy Leach, Managing Director, MPL said: "We are in talks with a growing number of property developers who have strong developments, but are facing a freeze on funding because their banks have got cold feet and want to see evidence of greater sales before they continue to lend against these projects. We are a cash rich fund, which means that we are in the market to buy some of these off-plan properties, provided we feel that they offer very strong rental yields, long-term capital growth prospects, or both.
"However, in buying these properties we are looking to pay an attractive but also a fair price for the developer as opposed to purchasing them at a deep discount. The price we pay will be recorded with the Land Registry and it will have an impact on the price the developer can achieve on the properties when the project is finished. The higher the average price they achieve, the better for us."
Source: Citigate Dewe Rogerson