Over the past few years, we have looked to diversify our development finance offering to burgeoning real estate sectors, such as the serviced apartment market.
Here, I highlight some of the reasons why we are confident about lending to this sector.
Weight of capital
When assessing the development loan of an operating or leased asset, one of our key underwriting criteria is to ensure there is a robust exit at practical completion. Over the past few years, the number of institutional investors interested and actively investing in serviced apartments has significantly increased with investment volumes growing more than fivefold from £89m in 2010 to £486m in 2018. The buoyant investment market gives us confidence in the asset’s liquidity and the appetite for built stock to be absorbed by the market.