Before they could tuck in, Ronson, 71, spoke in his matter-of-fact, glass half full manner. The man behind Heron Tower, the soon-to-be-completed luxury City skyscraper adorned with a vast aquarium containing 67 species of fish, spelt out the problems facing the sector.
"The banking sector has not been able to provide the oil necessary to get the development wheels working again," he warned on Tuesday. "Banks still have a lot of unfinished business of their own and the big question is what happens to the parcels of toxic waste they have tucked away. The banks, especially the Irish ones, will be sitting on some big losses."
The property industry is facing a cataclysmic problem. If it can't borrow, developers can't build or trade property. Even though the sector praised last month's Budget – with its reintroduction of enterprise zones et al – this will all come to nought if property companies cannot get the money they need to do their job.
As Ronson succinctly put it, the problem was caused by the free and easy lending of the last boom. There is no new lending because many banks – some of the Irish banks, Bank of Scotland and Royal Bank of Scotland among them – lent on inapproprivate deals and schemes that are now worthless, and the debt is still on their balance sheets.
More than £52bn of property debt will need to be refinanced this year, with another £121bn next year. And this at a time when banks are being pressured by authorities into putting more capital on their balance sheets, meaning even less money is available for property loans.
Real-estate adviser Savills published its annual list of the top lenders last week, highlighting the way the market has shrunk. In particular it noted the dwindling number of traditional lenders, such as the German banks – except Deutsche Hypo, one of the few still active.
Ronson told his audience that, with the banks closed, they must seek alternatives to debt. "The opportunity here is for more imagination to be used to find solutions to help them unwind their positions."
The largest listed property companies, British Land and Land Securities, teamed up with wealthy partners to fund their City skyscrapers – the Cheese Grater and the Walkie Talkie – in the past 12 months. While listed developer Capital & Counties is searching for a partner with housebuilding or construction expertise, which also has the cash to help build its 77-acre Earl's Court scheme in west London.
British Land's chief executive, Chris Grigg, said: "The opportunity to borrow from banks against development has fallen and I don't see this changing. Development will now have to be financed by equity – finding wealthy partners."
BalasHapus