CFI: Opinion


London bubble not likely to burst


by George Patellis, CEO, Tiuta Mortgages


as many an industry ‘ex- pert’ continues to cast their eye over the 2011 market and beyond, it is impor- tant to take into account re- gional variances when pre- dicting wide-scale market conditions. For all those businesses,


and indeed homeowners, in and around the London area it is apparent that the capital’s ‘bubble’ means it often per- forms differently from other parts of the country. it is such a market within a market that even the greater London area has to take into account its own regional demographics when analysing any overall performance. inevitably there


are certain boroughs that will outperform others in terms of property prices both in a commercial and residential capacity. However, looking on an


overall scale, sales of exist- ing commercial property in the capital are said to have totalled $13.9 billion in the first nine months of 2010, more than in any other world- wide city, according to a new report from new York-based real capital analytics. cash rich pension funds, sover- eign wealth funds, insurers and wealthy individuals were cited as the main buyers of shops, offices and even luxury homes in central London as low interest rates and concern that the global economy will deteriorate made other invest- ments riskier and less appeal- ing. London also ranked first in 2009 with sales of $16.8 bil- lion, the report adds.


it appears there is no sign


of this stopping, especially in light of the news that JP mor- gan is further expanding its London commercial property portfolio by recently acquir- ing the former headquarters of Lehman Brothers in canary Wharf. JP morgan is reported to be spending £495m to ac- quire the home of Lehman’s european arm before its col- lapse in September 2008. this move ends months of uncer- tainty over the investment bank’s plans, and means that it is now highly unlikely to move its 11,000 London-based staff overseas. However, as with most


things in the modern financial services marketplace unfortu- nately it is not all good news. notwithstanding London’s re- cent strong sales performance the value of commercial prop- erty in the uK is forecast to stall in 2011.


Look to 2011 with renewed confidence By Kam Sanghani, head of operations, Link Loans


as we enter the new Year, i believe we can do so with re- newed optimism. the past 12 month has been challenging however it is the future we need to focus on and i believe there is much to look forward to.


Following Link’s return in


march 2010 more new players will be entering the market which will help to expand the sector. the current core of se- cured lenders will work hard and seek to increase the mar- ket size and their market share through the introduction of competitive terms. innovation


will play a part as will invest- ment in technology. this will all help to provide


our intermediary customers with the confidence to invest in what they do best – lead generate and loan fulfillment through the adoption of suc- cessful marketing strategies. over the years. there have


been many respected com- mentators providing a ra- tionale of the benefits of a secured loan versus a remort- gage. the benefits remain the same, namely tcF, speed to arrange, separating lending requirements into different ‘pots’ and away from tradi- tional mortgage lending more associated with the property


and the very long term etc. another key aspect relates to regulation which those within the first mortgage industry will know is particularly chal- lenging to say the least. the FSa’s mortgage market re- view and responsible Lend- ing initiatives have some com- mentators suggesting that this will ration mortgage lending and recent figures released by the council of mortgage Lenders would seem to indi- cate this. this, i believe, provides an


excellent opportunity for the secured loans industry. at this time more than at any other, the traditional first mortgage brokers need to have a se-


cured loan offering in their portfolio of products and to sell the benefits thereby en- abling their customer to ob- tain much needed finance. traditional barriers to this have mainly been due to a lack of understanding of a consumer credit act regulat- ed loan and the requirements that this imposes on both the broker and lender. indeed, lenders in this sec-


tor are also required to lend responsibly however the office of Fair trading have, through consultation with the industry, recognised that a common sense approach is the best way forward. regula- tion should not be a barrier.


mortgage introducer FEBRUARY 2011 47 Property assets are predict-


ed to return about 6% in total next year, according to real es- tate consultancy King Sturge, which will be well down on total returns of around 16 per cent during 2010. this is not great news for the commercial market as it has undergone a decent period of steady growth since the signs of recovery emerged from the market back in 2009. Having said this, and looking at the evidence sup- plied earlier, as London was one of the first markets to re- ally illustrate any sort of recov- ery in terms of prices and vol- umes of deals being done then it is possibly best placed to combat any predicted falls. in- deed, King Sturge expects that central London offices will continue to lead the stronger performing sectors with con- tinued demand from overseas wealth funds looking for “safe haven” assets.


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