FINANCING PROPERTY DEVELOPMENT

Summary This paper, which was originally presented as the inaugural lecture of the Centre for Studies in Propety Valuation and Management at the City University in March 1987 analyses and explains the various options, both currently available and shortly to become available, which are open to a developer faced with the task of funding a particular scheme. To fulfil these objectives, a hypothetical retail mega‐development has been invented, realistic figures used and the various funding scenarios then applied to it, each on their own merit, with a view to selecting that which most suited the scheme. By way of introduction, the paper looks at the financial resources of the typical property company and then at the parameters which determine the commercial viability of a scheme. The main text then moves on to analyse each of the funding options available starting with short term borrowing, then looking at forward funding and commitment, then the mortgage alternative and finally a look towards the future with an explanation and application of unitisation to the hypothetical scheme. The paper concludes by comparing the various options set out above, giving the would be developer an indication of the merits and drawbacks of each.