Paresh Raja

In times of uncertainty alternative borrowing solutions are growing as investors eye up the short-term, says Paresh Raja, CEO of MFS

What impact has Brexit had on investors’ attitudes to managing their funds?

With the referendum result came an initial period of uncertainty for the UK investor community. In a climate of uncertainty, investors traditionally gravitate to secure and low-risk investment opportunities such as a property, a tangible and established asset class that enjoys consistent levels of investor demand, compared to other investments. At the same time, MFS research has also shown an increasing number of Britons embracing short-term investment opportunities that offer a quick return.

How is the bridging sector being affected by Brexit? Are these changes affecting the way investors are investing?

As we saw in the aftermath of the 2008 recession, the UK bridging sector has the chance to flourish when other lending models wain in activity. We have already seen that during times of change, high street banks and traditional lending structures almost inevitably become more risk averse, making it harder for investors and property owners to access credit or capital to support their long-term investment plans. By offering investors the opportunity to secure fast and efficient finance within the two-year Brexit negotiation period, bridging is uniquely positioned to offer greater flexibility than the more traditional lending structures.

What opportunities have emerged for lenders now the UK government has triggered Article 50, kicking off the Brexit process?

With the emergence of greater short-termism as part of the modern investor psyche, the challenge will be for lenders and brokers to communicate the wide array of short-term lending options that currently exist on the market. Greater education and awareness of the potential bridging holds to support swift and efficient property transactions, which can produce greater deal flows if well managed. In this effort, we at MFS have launched a series of research initiatives to reveal how property investors are responding to the critical political, economic, and industry events throughout the year.

How should managers be handling their portfolios in order to take advantage of these opportunities?

The UK’s diverse property market ensures a wide array of opportunities leveraged by the buoyant demand of investors, not only in and around the global hub of London, but also expanding into regional cities and the home counties. The emerging short-term attitude is certainly understandable given the relative level of uncertainty in the current climate and I believe that such an approach may well prove highly lucrative, if investors are open minded to fast-growing markets. New infrastructure has the potential to attract further investor interest in towns and cities across the nation—the MFS Property Heatmap, an interactive infographic, provides such information to property investors.

How do lenders need to adapt to the changing demands of the UK property market?

The MFS Property Index 2017 found that a third (33 percent) of UK investors are taking a short-term approach to investments as a result of the dramatic political and economic events of the past year. Further, 37 percent of investors are considering alternative finance and short-term lending options to support their investment strategies. In an uncertain climate, lenders must embrace the speed of deals that we are beginning to see following the triggering of Article 50 last month by providing financial solutions tailored to the needs of a market that is moving extremely quickly.

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Leo Civelli, CEO of Duff & Phelps Real Estate Advisory Group, discusses the effects of Brexit in the UK, further challenges facing the European markets, and the opportunities that lie in the non-performing loan space
The UK is coming to the end of a turbulent year for real estate, but Paresh Raja of MFS predicts a positive 2018 for those looking to expand their property portfolios
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