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What is the impact of incomplete development sites on lenders?

The real estate market is a dynamic landscape, influenced by various external factors that can significantly impact property development companies and their financial backers. Several market conditions have created challenges for lenders in recent years, particularly when dealing with incomplete development sites. Let’s explore these challenges and delve into potential solutions available to lenders when an incomplete development becomes distressed.

What external factors are affecting lenders in real estate?

What solutions should lenders explore?

Lenders can consider various solutions to mitigate risks. An initial assessment of a distressed part-built development is the recommended starting point for lenders. This involves understanding the costs to complete the build, an assessment of the current site value, an assessment of future gross development value, and the costs of capital (or holding costs).

From there, the following actions could be taken. It is important for lenders to seek advice from a specialist accountant to ensure they take the most suitable treatment.

Navigating incomplete development sites requires lenders to be proactive, adaptable, and well-informed. By understanding market challenges and exploring tailored solutions, lenders can mitigate risks and contribute to successful property development projects.

Remember, seeking advice from specialist accountants is crucial throughout this process. Lenders play a vital role in shaping the real estate landscape, and strategic decisions can lead to positive outcomes for all stakeholders involved.

If you would like further information on what would be the best solution for you, please contact Lee Lockwood or Gordon Thomson.

authors:lee-van-lockwood,authors:gordon-thomson