World’s Richest Homeowners Turning to their Real Estate Holdings to Access Cash
24th September 2020
During the early stages of the Covid-19 pandemic, high-net-worth property owners increasingly looked to unlock capital from their existing real estate rather than sell assets during a period of market uncertainty.
Enness Global saw growing interest in property-backed finance from clients looking to raise liquidity for a range of purposes, including refinancing existing debt, investing in businesses and taking advantage of investment opportunities created by market volatility.
One example involved an Asian family raising approximately £40M against a portfolio of properties in Knightsbridge. The capital was used to support further property acquisitions and private equity investments in the UK. Other clients used borrowing secured against high-value land and residential property to release capital for additional real estate investments.
For many wealthy families, property represents a significant proportion of their overall wealth and is often held with relatively low levels of borrowing. This can make established real estate an effective source of liquidity when structured appropriately.
During periods of low interest rates, borrowing against property can allow investors to preserve ownership of valuable assets while accessing capital for other opportunities. Rather than selling a property to raise funds, a carefully structured mortgage or secured lending facility can provide additional flexibility while maintaining long-term exposure to the underlying asset.
The trend also highlighted the different nature of lending at the top end of the market. While mainstream mortgage activity faced disruption during the pandemic, high-value transactions could often be structured through private banks and specialist lenders using bespoke underwriting and lower loan-to-value ratios.
