March 26, 2013

Christian Faes is managing director of Montello Finance



I’ve just come back from a road-show through Asia to promote our funds. It was great to catch up with some of our existing investors in the region, and have the opportunity to present to a number of prospective investment groups.


The feeling in Asia is significantly different to the market sentiment in Europe. We’ve all read about it in the press, but to be on the ground and speak with people in Asia was very interesting. It not just the weather that is hot down there.


Whilst the UK government seems to be struggling to find a solution that will stimulate mortgage lending, the Chinese government is trying to achieve the exact reverse – as they are trying to slow their market down as property prices and transactions have seemingly gone mad.


You only have to open up a newspaper in Hong Kong to see that they love property. The papers are filled with advertisements for property ‘opportunities’ from distressed property in the United States, to properties in Fiji, Kuala Lumpur and off-the-plan flats in London. 


The domestic Hong Kong property market is very hot, and we heard stories of people not even being able to bid for a flat off-the-plan in Hong Kong, without first submitting their financials to the developer, so that the developer could consider whether the buyer is worthy enough to bid on their development. If a buyer is considered worthy then you will be given an appointment, and allocated a flat and told the price.


With the people that we spoke with we found that there is also a very strong sentiment towards the London property market. The UK is recognised as a safe jurisdiction, far enough removed from the perils of Europe. Presumably the London property developers that are taking out full page advertisements for their schemes, know what they are doing; and accordingly London property has been promoted in a positive light in the accompanying editorial.


As one investment banker from mainland China explained to us, they love property, and London property makes a lot of sense from their perspective. He explained that as they look around the world, there are not that many cities that provide as safe a harbour as the Thames. Their clients are looking to diversify their wealth, and their focus is often not on providing a yield or capital upside, but instead on focussing on limiting the down-side. They think London goes a long way to providing this security.


Fortunately, the prospect of lending against London property through funds like the Montello Income Fund, are also proving to be popular. Whilst we are just a very small player in the scheme of things, it seems that there are many in Asia that could be interested in stimulating the lending market – and with the latest CML figures, it seems clear the UK mortgage market needs all the help that we can get.






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