From our perspective, as financial advisers, things are changing. Deals are happening and finance is there – just not necessarily in the places you would expect to find them. With transactions today, it is not uncommon to have five parties involved – developer, operator, senior debt provider and mezzanine and equity providers.
The North West is in a strong position going into 2013. The region, as we all know, offers some of the best prime retail space outside London. Central Manchester, in particular, is coping well. Developments like Ask's First Street and One St Peter's Square are emblematic of the city's property pedigree.
As traditional finance has become increasingly difficult to arrange in commercial property, alternative sources have grown in prominence and we expect more of these to come to the fore in 2013. There is, for example, a wide mix of equity investors attracted to real estate, as this is a sector that could help generate better returns. Moreover, we are seeing interest from ultra-high net-worth individuals who want to make direct investments. By 2014, in fact, these sources of finance may not be alternative at all.
The net result of this move towards less conventional forms of financing will be that prime property areas outside London, like the North West, will prove very attractive indeed to investors.
It should, then, mean that those in the real estate sector face 2013 with some optimism – and confidence. We need not be dragged down by the negative messages coming from economic forecasters.
- Marcus Archer, partner and head of real estate, Clearwater Corporate Finance