2018 was a successful year for the Avamore team. Employee numbers increased and notable highlights included securing new funding lines in June 2018 enabling us to lower our rates and, subsequently closing our largest deal in Q3. The Avamore team are thinking about what 2019 might bring and we’ve been asking key questions, see what they had to say:
What’s your hope for 2019?
It is no surprise that the impact of Brexit is at the front of everyone’s minds. With the 29th March deadline fast approaching, there seems to be a feeling of ‘watching and waiting’ across the industry. We have certainly witnessed people taking a small step back from a developer and investor perspective before they are ready to drive forward with renewed clarity. For the majority of the Avamore team (and we image for much of the market) the general sentiment is that we are hoping for a soft Brexit along with a suitable trade deal which minimises the expected rise in labour and construction costs. Whilst most are thinking ahead with optimism, Chris is simply hoping for some clarity no matter what the result might be, he feels that it is important to “understand what the implications will be so that we can plan appropriately”. Similarly, Emma is concerned with ensuring that a suitable plan is in place and is hopeful that the market will re-adjust to meet the on-going housing demand.
Turning away from Brexit, the team are also hoping to start working with more experienced developers and in some instances push out in terms of location. October 2018 saw the team closing a £6.3m deal at 0.59% p.m. which demonstrated Avamore’s commitment to working with a larger proportion of the market and the team all agreed that they want to execute on more transactions of a similar size and scale.
Toran also shared optimistic thinking on the housing market (independent of Brexit), he hopes “that laws will be relaxed to help alleviate the housing crisis and promote construction in the UK altogether. This could be through less stringent planning processes, ability to build on parts of the green belt, less onerous taxation on developers (s106/CIL/MCIL contributions), penalising empty property owners or by building on brownfield sites (government to subsidise remediation).”
What’s your expectation for 2019?
There is likely to be a stark contrast in 2019 between hope and reality. Zuhair observed that on the investment side “we have had a number of new pools of capital enter the development finance sector in recent times, we may see a proportion of these pools leave the industry as some of the more inherent risks of the sector materialise.”
From a developer perspective, Nick predicted that “there is likely to be short-term distress in the market and a number of developers will be squeezed out for a short period”. The team were in agreement however that the developers which are focused on a good product and understand the market will survive and the projects which are already funded will be delivered.
It is inevitable that in Q1 2019 and to some extent in Q2 the residential property market may experience a downturn, those looking to sell could find it difficult to do so due to the underlying uncertainty. Once the market emerges with renewed clarity there could be a wave in sales which were put on hold through the hope of a better result.
With so much resting on the result of Brexit, it seemed almost impossible to confidently predict market movements in the future. Overall, the team felt that despite the expected rise in material and labour costs, developers will re-adjust and continue to service the ever-growing demand.
What’s your resolution for 2019?
All of the team have high goals and expectations for 2019. There are plans to grow the team in a slow and sustainable way and, Michael is hopeful that Avamore will “build and release an app which will open us up to becoming more ‘proptech’ than ever before”.
On the personal side, both sporting and academic challenges have been set by various members of the team.