Expanding the capital stack: Heading into a new era of UK real estate private debt funding
In the dynamic world of real estate, the United Kingdom is undergoing a transformative shift driven by the rise of private debt.
Traditionally, banks and institutional lenders held sway in providing financing for property ventures. However, in recent years, the emergence of private debt funds and alternative lenders has injected a new dimension into real estate financing. There has been a convergence of factors propelling this surge in private debt within the United Kingdom’s real estate sector, and it is having a profound impact — but it is not all bad news for traditional lenders.
Following the global financial crisis of 2008 and the high-inflation/high-interest-rate environment in which we now live, banks have become more risk-averse in their lending practices. Private debt funds have capitalised on this demand by offering real estate developers and investors access to alternative financing sources with competitive returns.
On the one hand, investors are