There’s a big dislocation between the supply of capital and the demand for capital in the residential development marketplace, Paul Oberschneider, Founder & CEO, Hilltop Credit Partners, told Real Asset Media’s Richard Betts.
To address this imbalance three years ago he founded Hilltop Credit Partners, which so far has raised over £600 million from various institutional partners.
“We understand the cyclical risk and then relative risk related to real estate so we take a view that’s very much based on the underlying asset and try to anticipate movements in the market in order to make good decisions for our investors”, Oberschneider said.
Hilltop has tried to create a product that doesn’t replace the human element because “real estate is all about knowing and understanding markets”, he said. “Data helps you make these decisions but there’s nothing like getting in the car and going to kick the tyres, looking around and determining whether the demographic of the area actually fits the data that you’re looking at. Tech is a useful tool but it doesn’t replace what we do”.
Sentiment is changing in the residential market and we’re witnessing a slowdown.
“There isn’t that sense of urgency that you have to run out and buy a house tomorrow because they’ll all be taken,” Oberschneider said. “There will be a slowdown in velocity in terms of sales transactions and typically what happens is that the spread between bid and ask just widens”.
In the UK, many build to sell projects will need to be turned into affordable housing for rent because “that’s what the market needs”, he said.
Please click on the video above to watch the full interview.