From London townhouses to Parisian apartments, some of the world’s richest homeowners are turning to their real estate holdings to access cash.
Enness, a mortgage broker that caters to the wealthy, said more clients are seeking loans backed by real estate to help them repay other debt, invest in businesses and snap up cheap assets in the wake of a pandemic-driven rout of global markets.
One Asian family drew down about £40 million (S$70.4 million) against a collection of homes in London’s upscale Knightsbridge neighbourhood to fund property purchases and private equity investments in the UK.
A Middle Eastern client borrowed £15 million against a plot on the city’s north side to acquire other sites. An owner from Eastern Europe is tapping liquidity from his Paris home.
“We have individuals from all over the world contacting us for this very purpose,” said Islay Robinson, chief executive officer of London-based Enness.
“There is an abundance of mortgage finance available, and using real estate to secure a funding line can open plenty of opportunity – especially if you are borrowing at record low rates.”
Real estate is one of the largest asset classes held by rich families, comprising more than a fifth of holdings at family offices, according to a survey by UBS Group and Campden Research.
They are often not heavily mortgaged – if at all – making it an attractive asset to leverage.
The ability of the wealthy to unlock home equity contrasts with the wider housing market, where new lending has dried up because in-person property valuations, a cornerstone of the process, have ground to a halt.
UK home sales plunged by two-thirds in the week ended April 4, compared with the five-year average, according to real estate consultant Knight Frank. The decline has been more muted at the top end of the market, where bespoke deals and lower loan-to-value ratios are common.