HS3: ‘Where developers seek opportunity the lenders will follow’

HS3: 'Where developers seek opportunity the lenders will follow'

Development Finance Today has been told that a number of lenders are looking further afield to fund development projects.

The news comes as the government announced plans to kick-start the High Speed 3 (HS3) rail link in the North of England. 

The rail link is part of the government’s plan for a northern powerhouse with an upgrade in the region’s infrastructure and improved transport links between its major cities. 

John Waddicker, Director at Positive Commercial Finance, believes further development in infrastructure and networks will create more opportunities for property developers.

“Professional developers are and have been looking at such opportunities for some time now,” said John.

“Expanding the infrastructure and networks can only help and the HS3 will expand the catchment area. 

“A number of lenders have made it common knowledge that they are happy to look ‘further afield’ and beyond their historical geographical patch, thus giving the developer more funding options."

Gary Lederberg, Director at Affirmative Finance, also believes that HS3 will have a positive effect on the property market in the North. 

“The reality of the market is such that where infrastructure exists or is planned, developers will look for opportunity,” said Gary.

“Where developers seek opportunity, the lenders will follow.”

However, Ashley Ilsen, Head of Lending at Regentsmead, said it would take a while before opportunities opened up for smaller and medium-sized developers. 

“It’s more likely the government will need to lead the way with the investment before these areas become more viable, particularly for SME developers,” said Ashely.

“Larger housebuilders probably have the economies of scale to make it work but it’s less likely for an SME developer to build in a part of the country where some areas have falling house prices. 

“If the government can create a so-called ‘northern powerhouse’ then large strides are needed, particularly in terms of infrastructure before more developers turn their heads.”

Scott Marshall, Director at Roma Finance, concluded by saying that HS3 would change the map of the North but also stressed that the process would not be quick. 

“For property development, landlords, lenders and investors won't look at Manchester and Leeds as two separate entities for investment, but look at purchase and build opportunities across the region,” said Scott. 

"For lenders and developers, accessing sites and understanding the viability of a proposal will be easier as transport links improve. 

“But it won't be quick. 

“It could be another 8 to 10 years before we fully reap the rewards of the northern powerhouse.”

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