Katch Real Estate – Market Briefing

Private Debt Boutique


We focus on senior secured direct lending strategies with short durations that offer stable and attractive returns, protection and liquidity.

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Following the announcement of the mini budget in the UK and the subsequent market reaction and impact on Sterling, we are pleased to say we do not anticipate any major impact on the Katch Real Estate Lending portfolio. Katch has for many months been anticipating a slow-down in what has arguably been an overheated UK property market; by which we mean double-digit growth in property values has never been sustainable in the long term. A sentiment shared by our independent third-party surveyors/valuers, who have been cautious about property values in their technical reports for some time. 

To give some further context, UK property prices rose so strongly over the course of the global pandemic, that if there was say a 10% decline in property values, that would only take the UK back to the level seen last summer.

When assessing loans, Katch has always been stringent in our stress testing, to ensure that the loan to property values can withstand downturns in the market, for whatever reason, be that tax increases; inflation; global uncertainties, as well as a toughing of the mortgage buy-to-let loan market. Reflective of why to date the KREL fund has had no capital losses.

Katch also looks beyond the financial metrics; for example, we ensure that the underlying properties are suitable for the given area, i.e. that they are desirable/marketable.  Regardless of the wider macroeconomic environment, people still need homes to live in. To that end, what has not changed is the simple matter of supply and demand, there is not enough supply to meet the ever-growing demand. The UK is still a long way behind the government’s own target of building 300,000 new homes by the mid-2020s, to rebalance the housing market towards more home ownership. In the latest fully recorded year c.243,000 homes were built. Katch also looks to the financial strength of the underlying borrowers to see how they will be able to manage in times of stress.

We believe comments such as the ‘surge in interest rates threaten to paralyze the mortgage market’ are largely sensationalist.  There are well over 300 regulated mortgage lenders in the UK and significantly more unregulated lenders.  Only three regulated mortgage lenders (less than 1%) announced that they were to temporarily withdraw from the market, but this was jumped upon by commentators.  The reality is, the vast majority of lenders are still active in the market, and many are keen to build market share, especially those bullish and comfortable in their own underwriting abilities.

We expect to see the KREL fund value strengthen in the coming months, as more opportunities come to market from owners who must sell, and conversely the continued underlying demand from speculative buyers.  Through are speed and efficiency Katch will be able to make stronger returns while balancing the portfolio with a healthy balance of bridging and development to seasoned industry professionals.

Disclaimer: The Katch Funds are solely reserved to professional and qualified investors as per MiFid II. Past performance should not in any circumstances be taken as an indication of future performance. The value of the money invested in the fund can increase or decrease, as a result of currency fluctuation and there is no guarantee that all of your invested capital can be redeemed. Investors and prospective investors should refer to the official documents of the Fund, including the Private Placement Memorandum, for further information about the risk of investing in this investment fund.


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