How has the prime property market coped with lockdown? Uma Rajah CEO and Founder of CapitalRise speaks to PropertyInvestor Today
Uma Rajah, co-founder and chief executive of prime investment platform CapitalRise (one of the LPF’s founding members) gives her insight to PropertyInvestor Today on how the prime property market has coped with lockdown?
Click the link here for the full interview
……but here are a few nuggets from Uma in the meantime.
Is it still business as normal for the prime sector?
Operationally, the CapitalRise team has been largely unaffected by the UK lockdown. As a tech-based business, we utilise digital processes designed for remote working and from day one have used laptops and cloud storage, to ensure business continuity should we all need to work from home.
As a number of our team work usually work remotely anyway, collaboration tools like Zoom and Slack have also always been a part of our standard tool kit.
Customer behaviour has definitely changed since the lockdown began, but this has been overwhelmingly positive for us. We have seen a significant increase in loan applications and whilst we usually aim to close one transaction a month, over the last six weeks we have closed and funded three.
This has also highlighted a significant increase in investor appetite, with CapitalRise members funding million-pound deals in just a few hours. Our latest raise was our fastest ever, with investors reserving more than £2 million in just over two hours.
How are developments and investments going ahead with social distancing and lockdown measures in place?
We provide three different types of loans to assist prime property developers at the acquisition, development or sales period stage of their projects. We currently have ten live development loans and these sites remain open, with works progressing in line with hygiene and social distancing rules.
Access to materials and labour and the impact of social distancing rules are impacting the pace of progress, but as all our investment opportunities are structured to accommodate large delays (of one year or more), cost increases or drops in valuation (typically headroom of 37% loan to value ratio or more), we don’t forecast any of the current Covid-19 impacts will affect our investors.
Is the top end of the market immune from the inevitable economic decline not just here in the UK, but all over the world?
The prime property market is not immune from the pressures that will likely affect the whole of the property market, but we expect it to be far less impacted than other parts of the market and expect it to recover much faster.
In the UK, there is strong evidence to show that the prime central London (PCL) property market is more resilient than the wider UK market.
Savills data shows that PCL has bounced back faster and stronger than the UK market as a whole following downturns over the last 50 years - and recent analysis shows that PCL property was in a strong position going into the lockdown, following the so-called ‘Boris Bounce’.
Before lockdown began, the UK saw a 30% increase in £1 million sales across PCL in the first 11 weeks of 2020, compared with the same period in 2019. Plus, in the three months to mid-March, prices rose by 2.0% across prime London, pushing annual price movements into positive territory for first time in four years.
PropertyInvestor Today