Demand for residential and commercial funding is fuelling record investment levels in property development by the Development Bank of Wales.
The Development Bank reported loans totalling £48.8 million for 37 property development investments in the year ending 31 March 2021. This represents an increase of 43% compared to the previous year with support provided for 402 new homes and 70,892sqft of commercial space.
Led by director Cenydd Rowlands, the team of specialist property investment executives has recently expanded from 14 to 18 across Wales with the appointment of four new property investment executives to respond to the increase in demand for funding. Together, they manage a total fund value of £157 million that is financed by the Welsh Government. This includes an additional £30 million from the Welsh Government that was added to the managed funds in early 2021.
These funds comprise the £47 million Wales Property Fund and the £55 million Wales Commercial Property Fund along with the £55 million Stalled Sites Fund. All can be recycled multiple times.
Recent deals have included a seven-figure property development loan to help Abbey Construction build 10 three-bedroom, semi-detached homes in Churchstoke, Montgomeryshire.
Jason Price, Director of Abbey Construction, said:
“The loan from the Development Bank of Wales property team helped kick start our high-quality Ridgeway View development. We are delighted to have already secured buyers for all of the homes – the majority through the Help to Buy – Wales scheme. We’re passionate about providing much needed accommodation, built to our exacting standards, in the area and look forward to an on-going partnership with the Development Bank.”
In Rumney, Cardiff, Propco Developments Limited has completed the second phase of Waterside Business Park with all eight units now fully let or sold.
Part-funded by a six-figure loan from the Development Bank, phase two is a £1.5 million site that includes eight industrial units. Six have been sold to occupiers that include Richard Kemble Ceilings, Puma Floors and Absolute Performance with two units having been let on ten-year leases.
James Coombs is Managing Director of Propco Development commented:
“Commercial sites of this nature are often developed on a speculative basis and as such can prove challenging when trying to secure funding. This coupled with the additional challenges of Covid-19 meant that this site could easily have stalled if it weren’t for the support of the Development Bank . What’s more, the speed of turnaround was hugely helpful meaning that we could proceed with work on site without delay.”
Director Cenydd Rowlands said:
“From one-off single residential builds to larger developers like Lewis Homes and more complex developments with listed buildings like Woodlands House in Malpas, we are maximising our support for the property sector across Wales.
“The combination of our exit from the European Union and the economic impact of Covid-19 means that developers are facing unprecedented challenges with their supply chains and material costs. Our specialist team understands these challenges and is able to work with developers to create a tailored approach with flexibility to offer longer terms if needed. Importantly, our funds can go further because all the money received from our investments can be reinvested into more property schemes. This increases our impact without the need for additional funds.
“Our support for Propco’s Waterside Business Park is a great example of the difference that our funding can make. The scheme is now fully occupied and our loan fully repaid in just eight months enabling us to reinvest the funds for the benefit of future developers. Indeed, we are seeing increasing demand for more speculative smaller industrial and office funding. The record levels of take up and shortage of supply have been well reported at the larger end of the scale but this is something we’re seeing right throughout the market, all the way down to small lock up units. Some of our developers have substantial waiting lists of would-be purchasers/tenants, meaning in many cases they could sell or let their completed schemes several times over.
“Demand for new, good quality commercial premises is definitely on the rise in Wales which has created an opportunity for small, local developers and we continue to offer support through our dedicated development funds. Be it residential or commercial, we’re here and ready to do the deals that developers need to get their projects over the line.”
The Development Bank of Wales invests in residential, mixed use and commercial developments through the Wales Property Fund, Wales Commercial Property Fund and the Stalled Sites Fund. These schemes, funded by the Welsh Government, are recyclable and the money received is reinvested. Loans from £150,000 to £5 million are available for small and medium-sized developers based in Wales, working on residential, mixed-use and commercial development projects in Wales.
