Orf in equity warning to prime London resi developers
Apollo’s European head of real estate Roger Orf has warned that developers could lose equity in the prime central London residential market, owing to Brexit and declining demand in the £1,500 to £2,000 per sq ft bracket.
Speaking today at EG’s Finance & Investment Summit, Orf said that despite Knight Frank and others suggesting that the slowdown in high-end London homes had bottomed out, there was still a “surfeit of building that have been built for expats, and Brexit has stopped people coming to London”.
He said: “The possibility of someone paying £1,500-£2,000 per sq ft is remote, and the interest is much more likely to be in £400-800 per sq ft range. Some people disagree, but I predict developers will lose equity, although there won’t be debt losses.” He said this was because loan-to-value ratios were relatively low in that market.
Apollo’s European head of real estate Roger Orf has warned that developers could lose equity in the prime central London residential market, owing to Brexit and declining demand in the £1,500 to £2,000 per sq ft bracket.
Speaking today at EG’s Finance & Investment Summit, Orf said that despite Knight Frank and others suggesting that the slowdown in high-end London homes had bottomed out, there was still a “surfeit of building that have been built for expats, and Brexit has stopped people coming to London”.
He said: “The possibility of someone paying £1,500-£2,000 per sq ft is remote, and the interest is much more likely to be in £400-800 per sq ft range. Some people disagree, but I predict developers will lose equity, although there won’t be debt losses.” He said this was because loan-to-value ratios were relatively low in that market.
Private equity fund manager Apollo has previous experience in London residential, having backed Bruce Richie’s Residential Land in 2012. However, this was for high-end rent rather than sale.
Andy Pyle, KPMG’s head of UK real estate, said that there was a wall of similar money lined up for further investment in the build-to-rent sector, explaining that every week a new investor was declaring plans to plough a billion into the sector, “but the stock isn’t there”. He said it would take “three to five years before the sector becomes institutional”.
In the same panel, Orf and Pyle joined by Cameron Spry, senior partner, Tristan Capital Partners; Cyril Courbage, head of European commercial real estate, Fortress Investment Group; and Aref Lahham, managing director, Orion Capital.
Listen to the panel discuss these issues and more here
Listen to an interview with Aref Lahnam:
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