Property developers are increasingly seeking short-term funding to avoid selling into a weaker market, according to Suros Capital.
The luxury asset-backed lender said it had seen a rise in enquiries from developers looking for liquidity while residential values remain under pressure, particularly in inner London.
Suros said some borrowers were using short-term finance to hold property for longer rather than bring assets to market at a point when valuations are subdued.
The lender said this reflected tougher conditions for developers trying to preserve margins in a softer sales environment. It added that some were looking for alternative sources of funding to bridge a period of weaker pricing rather than accept a discounted sale.
Ray Palmer (pictured), director at Suros Capital, cites a recent case involving a developer who needed £220,000 to delay the sale of a property.
He says: “Our client referred by a bridging finance broker, required £220,000 to allow him to put off selling a property at a time when prices are negative. The loan provides him with a buffer against the vagaries of the current market and gives him the time to choose the right time to sell to optimise his profits.”
Palmer says the borrower’s luxury assets were used as security for the loan, allowing the funds to be released quickly.
He adds: “Given his immediate need for a cash injection, his adviser told him to contact Suros Capital. We were able to assess and value his collection of gold bullion and Rolex watches and within 72hours of the initial enquiry we were able to deposit the full £220,000 into the client’s account.”
The case points to continued demand for specialist short-term finance among developers and business owners with significant personal assets, particularly where borrowers want to avoid crystallising losses in a weak property market.
Palmer says: “For property developers and other businesspeople who have made investments with a view to increasing the value of their holdings but have seen growing weakness in the economic climate, Suros Capital offers a unique short term funding opportunity.”
