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Innovative real estate development finance – evidence from Europe

Graham Squires (Centre for Urban and Regional Studies, University of Birmingham, Birmingham, UK)
Norman Hutchison (Centre for Real Estate Research, University of Aberdeen, Aberdeen, UK)
Alastair Adair (Built Environment Research Institute, University of Ulster, Newtownabbey, UK)
Jim Berry (Built Environment Research Institute, University of Ulster, Newtownabbey, UK)
Stanley McGreal (Built Environment Research Institute, University of Ulster, Newtownabbey, UK)
Samantha Organ (Department of Architecture and the Built Environment, University of The West of England, Bristol, UK)

Journal of Financial Management of Property and Construction

ISSN: 1366-4387

Article publication date: 4 April 2016

Abstract

Purpose

This research aims to provide an insight into large-scale real estate projects in Europe and how they are using a more innovative blend of finance.

Design/methodology/approach

The methodology involved a mix of desk-based study, interviews and case studies. Interviews were held with financiers, policymakers, developers, investors, fund managers and academics. The specific case projects were Battersea Power Station Development in London; Leipziger Platz site in Berlin; and the Lammenschans site in the city of Leiden, The Netherlands.

Findings

The research found that there is growth in the blend of financial products used in real estate development within large-scale mixed-use projects. This new blend is set with greater equity financing, often from domestic and foreign consortiums generating institutional funds – alongside private debt financing – that utilise a mix of large-scale multi-bank finance.

Practical implications

The scale of the challenge in financing real estate development allied with capital budget constraints has meant that the appetite for innovative finance mechanisms has gained considerable momentum in practice and policy. This research investigates current examples in development finance and provides a discussion of the opinion of key multi-stakeholder participants in the individual cases, and trends more strategically at a broader level.

Originality/value

This detailed study of three major development sites and at a more broader strategic level is significant, in that it provides a better understanding of the differing blends of finance that are being used.

Keywords

Acknowledgements

The authors would like to thank the Royal Institution of Chartered Surveyors (RICS) for their financial support of the project and the numerous respondents who gave so freely of their time.

Citation

Squires, G., Hutchison, N., Adair, A., Berry, J., McGreal, S. and Organ, S. (2016), "Innovative real estate development finance – evidence from Europe", Journal of Financial Management of Property and Construction, Vol. 21 No. 1, pp. 54-72. https://doi.org/10.1108/JFMPC-09-2015-0036

Publisher

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Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited