Shojin is an investment company which offers access to institutional-grade opportunities in the UK real estate sector.
- Shojin Property Partners raises over £3m
- Shojin raises over £2.1m via its property crowdfunding platform
- The need for development exit finance: 'Why wouldn't you want to be hedged against a changing market?'
The platform’s anchor investors are typically family offices, with the rest of the deals funded by the mass-affluent market.
During a period of rising competition over land and site purchases, Jatin explained that buyers can end up paying too much.
“We see a lot of developers come to us where they’ve either bought the land — which is slightly more worrying — or about to buy it, and are overpaying quite considerably,” he said. “That introduces the biggest element of risk in the project.”
He stipulated that the age-old saying, ‘you make money when you buy, not when you sell’ applies here. “If you overpay for the land, you’ll never recover from that,” he stressed.
He emphasised that what is extra concerning is when land is on the open market and there is a competitive process to achieve the highest price, as opposed to developers utilising their deep relationships with landowners.
“By the time it comes to us, we find that a lot of the profit has been sucked out already, and developers really need to be careful on those. It’s better to walk away from a deal than overpay.”
This comes at a time when Brexit, Covid-19, a labour shortage, supply chain breaks and China’s production levels have all fed into this ‘perfect storm’ where costs are considerably higher for the property development market.
“When you’re looking at the financial appraisal, you’ve got to allow for some cost inflation within that. ”
The full interview, which discusses how Shojin is funded, as well as the current junior debt and equity landscape and the products’ biggest misconceptions, can be viewed below.