Rajul Dhokia and Matthew Hattersley ask if US wealth can help revive stalled UK developments

At the tail end of the pandemic, remote working and low interest rates created significant developer investment into rural areas. However, as interest rate and build costs increased potential profit turned to loss and some schemes are now looking for buyers. Writing for Estates Gazette, Rajul Dhokia Director, Mantra Mortgages, part of BTG, and Matthew Hattersley, director and asset advisory expert at BTG Eddisons, ask if an influx of US investors could provide a route out.

According to research from Savills, 10% of buyers of prime London real estate are now from North America, an increase of the previous peak of 7% in 2022. Additionally, data from the BPF finds that in 2024 US investment in UK commercial property doubled to £13.6bn from the previous year. This marked a record 33% share of all investment into the UK. 

Rajul and Matthew write:

“In our own work we are seeing investments taking off. But what is to stop this money flowing to the opportunities in other areas, beyond London real estate and commercial property? Primarily, there is a huge chance to help complete rurally located ‘zombie’ schemes with developers seeking to cut their losses.”

These ‘zombie’ schemes were created by developers buying rural land when money was cheaper, remote working was thought to be here to stay and the potential for profit higher. The dial has since moved the other way in these three areas and some of these developments are looking to auction houses like our own to recoup costs, but there is also opportunity to invest where commercial and residential mortgages as well as funding can help.

Rajul and Matthew write:

“Whilst one side of this story is about distress, the other is about where the investor opportunities lie and rescuing developments from never being built-out and completed. With the right investment, and the right buy-in price there is significant appeal.

“For instance, planning permission – which has well publicised delays - has been granted, a number of buyers for completed units have been secured and grid connections are either complete or approved. The shift in price point is the key to viability and the returns for buyers can be relatively quick.

“US investors have noted that the UK provides an opportunity for investment and responded with billions of dollars across the high-end residential and commercial markets. 

“As with any investor they will be looking for the next opportunity.”

As our teams find buyers for these stalled ‘zombie’ schemes at a reasonable price, there is an opportunity for investors, domestically or internationally, to complete them and reap the rewards. But this will not only bring a positive financial impact, by delivering much needed homes it can deliver a positive societal impact too.

Read the full article on Estates Gazette