Building trust means being able to understand the interests of both parties and finding critical points of alignment.
What investors look for in developers
When investors look at potential development partners, the important element is feeling comfortable with the developer’s ability to deliver on the project. While the real estate opportunity itself is crucial, the capabilities of the developer take precedence.
This means assessing the developer’s track record and how that corresponds with their vision for future developments. Beyond just knowing the developer themselves, an investor should also learn about the broader team, such as the contractors, architects etc, who are equally vital to the success of any development.
I’d always advise sticking with a development partner you trust, rather than choosing what looks like a perfect opportunity with a developer you doubt can perform.
How developers can sell themselves to investors
A clear, transparent track record that shows clear progressions from project to project is the strongest means for a developer to make their case to investors.
- Avamore and Cogress provide £5.6m loan for Bristol scheme
- Cogress invests £35m across 11 development projects
- Cogress raises £1.6m for mixed-use development
While it might seem counterintuitive, identifying a developer’s weakness can actually give investors plenty of confidence. For example, some developers who are great in construction, may struggle in legal or financial matters. Therefore, presenting a full development team of professionals that can bridge this knowledge gap is a positive way to inspire investor confidence.
Aligning the interests of investors and developers
In many ways, developers and investors share a common goal: a successful development that provides both with a sensible return.
The relationship between investor and developer must be clear at the outset of any project, which is why we take the approach of a joint venture partner to represent the interests of investors and work alongside developers to achieve the best all-round results.
How collaboration will help the market
Even as the current landscape provides developers with relatively cheap, but cautious finance, equity investors have a significant role in allowing developers to embark on greater numbers of developments to ease the housing crisis.
Without equity investors, only developers with large cash reserves would be able to complete multiple developments, which would inevitably depress competition and quality in the market.
The emergence of more equity platforms provides developers with access to equity funding – without dealing directly with numerous investors – meaning developers can complete more developments, more quickly, with investors confident in their ability to deliver.
It is only by fostering greater trust among investors and developers that our investment market will continue to thrive in the months and years to come.