Property Developers Being Bearish

[repetitive bleats]

My Landlord is a property developer. He's the real deal, a proper grafter - not one of those buy a house, paint it and then try and flog it sorts. He will buy a run down property, flatten it and put up a load of new flats.

We often chat about what he is up to. I was chatting with him yesterday and remarked on a house up the road that was for sale (he seems to be buying up the entire street slowly but surely) and was stunned by his response. He said straight out - he'd be nuts to be buying anything in the current climate. I didn't push him to elaborate as his comment was pretty self explanatory but this is the same guy who only 2 months ago was prospectively offering someone well over the odds for their property (which wasnt even on the market) only a few doors down.

A pal of mine is a property developer in London and alerted him to what i thought looked like a commercial opportunity in the South East last week. It has possible residential use and being commercial property it is going for a relatively reasonable price. He stopped me dead and told me that he is now only concentrating on W1, NW1 and SW1 as in his view anything outside of that is 'going to be a bloodbath'.

There is a definite change of attitude amongst developers.

Edited March 28, 2011 by majestic whine

[efdemin]

They're not daft; they can see the easy debt money has dried up. Why risk putting their own capital down on a risky business?

[repetitive bleats]

They're not daft; they can see the easy debt money has dried up. Why risk putting their own capital down on a risky business?

Thats pretty much the case. We were talking at cross purposes at one stage when I was mentioned that there is increased VC money becoming available (for tech startups) and he said 'there is no money out there'.

[eric pebble]

They're not daft; they can see the easy debt money PREDATORY LIAR LOANS hasve dried up. Why risk putting their own capital down on a risky business?

Edited March 28, 2011 by eric pebble

[repetitive bleats]

Update: The pal i spoke of above who has put together plenty of large deals and has an excellent relationship with his usual lenders is spitting mad. He's seen 'a no-brainer' opportunity in his usual patch in London and been told that he needs to find 50% in order to borrow the funds to buy it. He is incredulous as he was expecting 20% at the very worst (which was still way more than before the banks crashed). I only know 2 property developers who have never met eachother - both of them been doing it long term - and both of them in the space of a few days have told me that lending for buying properties has suddenly dropped off a cliff this month.

[mrtickle]

Ta for the update!

[bergkamp N4]

Have just come in from the Allsop Auction held at the Park Lane Hotel today. Sale ran late as a fire alarm went off in the kitchen and caused a long delay.

OP the experience I saw there do not accord with the reading of the market by your landlord and pal as the prices achieved were very very toppy.

Re your landlord when you chatted he probably had a miserable day + was venting as if you almost bought a whole street you dont stop halfway through.

Re your pal if the no-brainer opportunity was so great they would find a way to finance either through business contacts, friends/relatives or previous successful ventures that came through. Over the last 8 years any old monkey could have made a go of property developing in N london as the downward correction didnt happen so they should have a bit tucked away.