The Property Industry Alliance has reconstituted its board and brought in a trio of industry heavyweights to ensure that its Vision for Real Estate Finance becomes a reality.
Richard Dakin, Rupert Clarke and Andy Rothery are among nine new members of the 15- strong Property Industry Alliance Debt Group. Each will lead a separate work stream based on Vision for Real Estate Finance’s recommendations.
The group was reconstituted after Andy Brazier, Bank of England executive director, financial stability and risk, outlined support for the proposals last month. It is chaired by Aviva’s European head of real estate, multi-manager John Gellatly, and Phil Clark, Kames Capital’s head of property investment.
The three working groups will bring together senior industry members with a range of experience.
Clark said that around 15 people would eventually be appointed to each group.
One team, headed by Lipton Rogers managing partner Rupert Clarke, will attempt to establish a long-term value metric for commercial properties.
It aims to reduce the snapshot effect of valuations, which can distort the true risk of borrowings in portfolios.
A second group, headed by Dakin, will look at how to create a real estate loan database.
It will consider how best to make real-time lending data accessible but discreet, to allow regulators, new entrants and borrowers gain a better idea of the current state of lending in the UK.
The third group will see Rothery head a team that will look at establishing an industry-wide qualification for real estate professions.
Only Clarke’s group has been fully assembled but all three are expected to be operational and reporting back within months.
“The industry is applauding [Brazier’s] support for the initiatives,” said Phil Clark. “It is good to see such a positive steer from him and the Bank of England on the industry’s proposals.”
Comment
Nicholas Scarles, group finance director, Grosvenor; chairman, Real Estate Finance Group
The Bank of England has decided to pursue two recommendations from the Real Estate Finance Group’s Vision for Real Estate Finance in the UK, but we cannot celebrate yet.
A comprehensive database of real estate lending is central to the vision, but the number of data fields should be minimised to ensure efficiency and practicality. We must decide what these fields should be.
The Vision says the public should be able to access aggregated and anonymous data, but how much should they see? An understanding of the market helps public confidence, but confidentiality should also be maintained.
The creation of a long-term value metric is integral to ensuring stability, but a challenge is the extent to which the metric is calculated on an asset-by-asset or aggregated basis.
In time, the former would probably give better results. But so much can be gleaned from a macro approach that this might be a good interim strategy.
And even if we start collecting data now, it is going to take a long time to build the desired dataset. The ideal scenario would be the creation of reliable historic data, which is likely to be provided in part by individual lenders. The Bank of England’s announcement was a big step forward. We now need to seize the opportunity.
