Real-estate finance — how to survive the next boom and bust

By Mike Delaney

The legacy of the global financial crisis is ever apparent, especially for those working in the real-estate finance sector. Although recent factors point to a more optimistic market, there is concern that a return to over-exuberant lending practices could lead to trouble further down the road.

The future of the real-estate finance sector was the focus of a report issued by the Real Estate Finance Group in October 2013, ‘A vision for real-estate finance in the UK’, put together by representatives from, among others, Grosvenor Group, CBRE, Kames Capital, HSBC Bank and Aviva Investors. The report contains seven recommendations to help the real-estate finance sector survive the next market crash. Landlords, developers, banks and other lenders within the commercial real-estate sector may be interested in the proposals. The final recommendations chosen for implementation are expected to be published in a final report in early 2014.

The aim is to promote self-regulation within the commercial real-estate finance market. While the report recognises that regulation is needed to prevent over-lending, the focus is on minimal intervention. It is suggested that too much intervention by regulators can distort the market, thereby exacerbating any peaks and troughs that are already occurring and compounding damage to financial markets…

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