Heron Annual Lunch 2010
Yesterday was a big day for Heron as we celebrated the Topping Out of the Heron Tower, now officially the tallest building in the City of London. We bought the site in 1999, started work in 2006, and this time next year it will be completed. Despite the length of the project, it is hitting the market at the right time and is just one of the £1.5 billion of development projects Heron is currently working on in the City of London.Whilst we are still punching away, there is no denying that events since 2007 have accelerated the process of change in the property business. The industry is going through an evolutionary process; the property developer, though not extinct, is on the endangered list.
The dynamics have been changed by the absence of construction finance and the amount of equity that is needed. This makes it very difficult for the development industry to function. Having said that, the banks appear to have achieved a more stabilised base under which to operate but they have a major role to play in regenerating the industry from a development and investment perspective because you can’t have either without the banks. They need to support responsible, professional developers who know their business, where prudent development risk is justifiable. It has the added benefit of creating investment and jobs at a time when both are clearly needed.
Currently the property market is being driven by the availability of cash. Understandably investors find the returns from prime property, for which there is a premium, far more attractive than they do having their cash in the bank; it is also one of the best hedges against inflation.
