Property developers hit by lack of funding

GOLDMAN Sachs yesterday admitted that banks were holding back property development in central London by not providing capital for new projects.

Developers want to take advantage of the current uptick in demand for office space but have been unable to find funding, they told City A.M. at MIPIM, Europe’s largest property fair.

“Demand is there but finance from the banks is not,” Ben Broadbent chief UK economist at Goldman Sachs said.

Banks are likely to provide funding to companies that have signed pre-lets but no longer feel confident enough to speculate.

Property companies, Jones Lang LaSalle and King Sturge, both said that they had been in constant negotiations with banks over the possibility of acquiring some of their distressed assets. But banks have been reluctant to sell assets in London due to the pick-up in rental markets.

Broadbent added: “I know property companies who want to buy banks assets but with regards to central London banks will wait until their portfolios have matured.”