Some eleven months ago I met up with Steven and Carolyn Sparks, his wife/business partner in Lewes, Sussex to look at the progress of their latest development project. They have been active in the local market in Lewes and around the Brighton area for many years and have a long-term rental portfolio, mainly of apartments in smallish blocks, which complements their ongoing development projects.
The pandemic period since March 2020 has impacted adversely on many property developers and contractors causing delays, rising costs and shortages of both skilled labour and materials. As such I was pleased to hear when I spoke again with Steven recently that despite some challenges, there has been real progress and that their development in Lewes is now complete and with all the units now sold.
“Yes, we do have our long-term rental portfolio and by some people’s standards it is very lowly geared, some might even say its ‘madly geared’ but that gives us the security to take on development projects knowing that we are not risking everything on one throw of the dice. We have a manageable size portfolio and it’s run just by me and Carolyn.
“This gives a good income return and we balance this with creating some selective mainly residential developments which are sold to end buyers. Historically we have been based in Brighton, but we look now at some other higher value locations such as Lewes and Tunbridge Wells. These are commuter towns and are sought after locations with consistently good demand.
“Yes, there are other locations, some of which are currently seeing good demand but as a developer the ‘safety’ of our investment funds is very important, so we want to minimise risk. If you get a downturn akin to that which occurred in 2008 then demand and confidence can take time to come back, so as a developer being in prime locations means less risk.”
These are interesting observations from a time-proven property developer as many developers can get carried away in a typical market cycle, and are then exposed to a sudden downturn, often accentuated by highly geared borrowing.
