Is There Economic Potential in Property?

Is There Economic Potential in Property?

There may be challenging times ahead for the UK economy, post-Brexit. How challenging is still up for debate, but uncertainty is in the air.

In this climate, the various elements underpinning the country’s economy will need all the support they can get, and this includes the property sector.

What role could property development play in the economy, and how should we support it?

Real Estate’s Economic Role

Property is a major enabler of economic activity. It provides businesses with the space to operate in, and therefore supports the business infrastructure that underpins a modern economy”

On top of this very physical element of structural support, real estate also provides substantial employment in the economy.

We’re not just talking about construction here, but also architects, surveyors, financial and legal advisors and facilities managers. Property supports a wide range of areas when it comes to employment.

Property also helps generate a need for a wider infrastructure, including transport, schools and hospitals.

Buildings are at the heart of regeneration schemes, developing a two-way relationship between property development and the surrounding environment. Each supports the other

Property also represents a considerable generator of investment in the economy, as an attractive asset, including international opportunities for investors.

Real estate provides leverage for economic growth, but to maximise this potential, it needs the right kind of financial support.

Is Finance Failing Property Developers?

One obstacle property developers can face is obtaining funding for their projects.

Would-be developers may find that finance is difficult to come by through the main banks. As with other SMEs, many find the experience frustrating, and, where a loan is offered, the conditions attached to it may make it unworkable.

The FSB index has recorded falling levels of credit applications, with only one in 10 SMEs applying for some form of external finance.

There is a sense that the relationships between banks and smaller businesses is now strained, with banks seen as too rigid, and many SMEs feeling that even applying for a loan isn’t worth the bother.

Where Does This Leave Property Developers?

The key thing is to raise awareness that there are alternatives when it comes to funding projects. Alongside specialist mortgage solutions, there are also short-term means of securing finance, such as bridging loans.

What matters is that the funding solution is appropriate to the needs of the developer and the specific project.

The housing market may sometimes seem to be a burden, which the UK economy must bear but, however overheated property prices can appear, this sector remains an essential cornerstone of economic growth, which requires support at grassroots level

The demands for housing are ongoing, and property development is a growth generator.

Supporting developers financially is essential to the health of the economy.