Oliver Bamber is a Director in the UK Valuation Division at Savills, which is a specialist Loan Security Valuation team within the Savills UK business that in the past 12 months has provided valuation advice to in excess of 100 different Banks and lending institutions. Oliver has been with Savills for 5 years, and spends the majority of his time advising a wide range of UK and International Banks on both new lending and recovery positions throughout the UK.
Dorothée Queyroux: What is the proportion of new instructions and new transactions versus revaluations and restructures?
Oliver Bamber: That's a very difficult question, but I would suggest that over the past 24 to 36 months our business has been dominated by revaluation/restructure instructions, however with the improvements seen in the market through Q3/Q4 2010 into first half 2011, new lending instructions have increased month by month and now probably dominate our work load. Whether this continues to be the case remains to be seen and will depend largely on economic and market dynamics over the next 12 months or so.
DQ: How is the residential market behaving outside of London? Does the weak lending situation dissuade buyers from entering the market? Which regional locations in particular are performing most strongly in terms of demand?
OB: The general rule is that residential outside London and the South East has been very challenging with little sign of improvement. However, there are certain regional towns and cities, such as Winchester, Exeter, Chester, Cambridge, Oxford and others where markets have recovered and we are seeing increasing demand for stock (new build and second hand),coupled with a general shortage of supply. This in turn has lead to price appreciation and demand from developers seeking easy build opportunities.
DQ: A couple of questions for you on the still very hot topic of prime London residential. First are developers which focus on this market still losing sites as a result of bids from wealthy overseas owner-occupiers? Second once schemes have been completed, what trend have you noticed in terms of the nationality of purchasers? Have an increasing number of Europeans bought into the London market in a flight to safety away from the uncertainty in Europe?
OB: The short answer to this question is that PCL Residential remains a genuinely global marketplace and it never ceases to amaze us how many countries are represented in the buyer profile. Yes the Europeans are in the market, but recently significant sales have been recorded to literally dozens of other nationalities including: India, Brazil, New Zealand, Russia (and all the ex-Soviet states), USA, China and many more.
DQ: In contrast to the owner-occupier and residential development market of prime Central London to use an obvious example it is widely reported that the market for 'less glamorous' commercial stock (perhaps regional, secondary/tertiary, tired or dated, of low occupancy, or many of these features) is flat at present. To what extent are you and/or your clients identifying value in applying significant asset management techniques to these holdings?
OB: You are correct; the market for secondary/tertiary commercial stock remains exceptionally challenging with weakening occupier demand in many markets, particularly retail but also offices and smaller industrials. The problem facing an asset manager seeking to add value to this sort of stock is the lack of occupational demand, as without tenants any asset management strategy tends to fall flat – and an asset management strategy of "spend a bit on refurbishment and get the space let" is not really credible, it needs to be more creative than this.
DQ: Both borrowers and lenders are struggling with the difficult lending conditions and lack of liquidity. How significant have you seen the role of dedicated brokers in assisting with requirements and adding additional value? What would be your advice to borrowers who are looking to structure their transactions in the most efficient and sensible way possible?
OB: Since the effective closure of the Banking markets, post Lehman, the role of the broker has never been more in focus. Fundamentally anyone who can help a Borrower either re-finance away from a legacy position, or seek new finance to get into the market, has to be worthy of a fee! This remains true now as much as ever with very constrained lending commitments from Banks and, perhaps more importantly, a far more stringent approach to due diligence, risk profiling and security taken by Banks in the current market.