Magical time for lenders, says Savills

By Jim Dow

IT USED to be location, location, location – now, according to Savills, it is lend, lend, lend.

That’s the message the company had for more than 180 bankers who attended a seminar in Edinburgh on the theme “Navigating Through the Turmoil”.

Mat Oakley, head of commercial research, told them: “You might feel you are trudging through a swamp of uncertainty, but this is a great time to lend.”

William Newsom, head of UK valuation, agreed. Margins were up (the highest for eight years), loans to value were down (the lowest for eight years), arrangement fees were the highest on record and exit yields were up.

“What a magic combination for lenders,” he said. “Some property lenders are making a shed-load of money. Lenders today are able to lend on terms that 12 months ago they could only have dreamt of.”

Newsom said there are now 53 lenders with an appetite to lend to new customers, and 16 new lenders have entered the market over the last 12 months.

He continued: “For both commercial and residential lenders, this is a brilliant time to be lending on well-secured and profitable terms. There is no shortage of organisations prepared to lend. However, like the property markets, it is about pricing - and risk has been re-priced. There are lots of funds waiting to pounce when the market reaches the perceived bottom.”

On the regional office markets, Oakley said he was getting more questions asked about

William Newsom: "Shed-loads being made"

places like Edinburgh, Glasgow, Manchester and Birmingham. They were less cyclical than London and less exposed than London to international trends.

He went on: “If you want to invest in the UK, look at these locations. There will not be wholesale re-locations out of London but businesses which are South-east-based and are looking to expand will be looking at cheaper locations, and these locations will benefit from quite high-profile expansions out of the City of London.”

Savills was anxious to put a positive spin on the property market but Caroline Parker, head of valuation, Scotland, said the residential market was inextricably linked to the commercial market and the residential market, to say the least, was a bit tricky.

She said: “It is clear that the price drops are not a question of affordability but a credit crunch, as demonstrated by similar price falls across the country. Although repossessions have been running at only a third of peak 1990s levels, they are consistent with the early stages of the 1990s downturn.

“Unemployment, committed development stock and repossessions are the key influentials on the housing market at present, and we expect further decline if mortgage markets do not ease by the end of the year.”