John Slade, Non-Executive Chairman of the Real Estate Advisory Group at Duff & Phelps, was interviewed on talkRADIO about London’s commercial real estate landscape and the importance of overseas investment.
John states that overseas investors, who comprise over 75% of the market, add value by making London a dynamic city, benefiting the infrastructure, and bringing capital into the country.
He also stresses the significance of the relationship between landlords and tenants. The property market is more sophisticated, as are investors. With the ease in which people can compare yields on their property to other types of investments in their portfolio, it’s more important that the landlord satisfies the tenant, and that the tenant is satisfied with the building.
When asked to provide an assessment of the current risks, ten years after the financial crisis, John explains, “Banks ten years ago were on…a feeding frenzy…It was the amount of money that the banks were lending against the properties. Rather than lending 50-60% of the value of the properties, banks were lending 90% or 90% plus.”
He explains further, “I don’t think there’s a risk as long as people are mature, and they lend the right percentage. If you lend high percentages loan-to-value against property, then you’re looking at a problem situation.” John confirms this is not the case now, as banks are being fairly conservative and there is much more restraint in the market.
Listen to the full interview below.
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