PROPERTY & INVESTMENT
There are no specific criteria when it comes to experience , but we try to get some sort of evidence that they ’ ve already done something similar to what they ’ re doing today . That would give us the comfort that could very well lead into the next deal .
How will interest rates impact on lending ?
22 P R O P E R T Y N E W S
GP : The trend towards compact , more affordable living means there is an opportunity for developers here , even though interest rates will need to be factored in as they are likely to continue to rise . It is also expensive to build , and there are supply-chain concerns going forward , given the invasion of Ukraine . For perspective , in South Africa prime was at 7.25 % in May 2020 and now we ’ re on 8.25 %.
Can South African developers turn to lenders from abroad for support ?
GP : I know of offshore Development Finance Institutions ( DFIs ) that have funded local developments , but it ’ s usually only for an aspect of a development . For example , one might lend only for the infrastructure needed on a development . They don ’ t typically dabble in top structure funding .
What changes can we expect to see in the financing market long term ?
RG : Since Covid , several lenders have come out of the market , but it ’ s still heavily saturated . The alternative lending market will evolve . Long term , the industry will become more regulated . Alternative lending is a very small part of the market but as any sector grows , they [ regulators ] look to keep an eye on it .
Angelique Ruzicka