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The upturn in the property market gained momentum in 2010 but bank lending remained far below pre-credit crunch levels, slowing up deals and leading to many abortive transactions. The market is responding by adjusting and shifting away from debt financing, with buyers funding transactions by relying on joint ventures, international equity fundraising or no debt at all. This trend has had a marked effect on development activity, where the lack of finance has been the main barrier to projects commencing. However, investment into the London real estate market has been increasing, particularly led by overseas equity, with investors targeting the prime and office markets, notably in the City, Canary Wharf and the West End, following a pick-up in occupier demand. Headline-grabbing deals included 20 Fenchurch Street (the Walkie Talkie building), the £495m sale of 25 Bank Street, and Capital Shopping Centres Group’s acquisition of The Trafford Centre in Manchester. Looking ahead, the amount of property lending due for repayment, renewal or refinancing in the next few years raises the prospect of enforcement action by the banks.

Competition for big-ticket jobs remains fierce, but those firms with strong corporate and finance offerings – such as Clifford Chance and Linklaters LLP – are generally faring better than most. Clients are also looking to full-service real estate practices of established players such as Berwin Leighton Paisner LLP and Nabarro LLP, who also dominate in property litigation.

There has been some movement among firms, notably Jon Vivian’s move to Irwin Mitchell LLP, along with three other partners, to build a London presence. Berwin Leighton Paisner LLP recruited James Knox from Linklaters LLP and Michael Metliss from SJ Berwin LLP, but also lost three property finance partners to Simmons & Simmons.

The UK property finance market continued to battle considerable uncertainty, with many banks focusing on restructuring existing loan books. Allen & Overy LLP, Clifford Chance and Linklaters LLP were favoured practices for large, complex and often international deals, and advised on numerous high-profile restructurings. The National Asset Management Agency (NAMA) emerged as one of the big three property lenders in the UK, along with RBS and Lloyds Banking Group.

On the construction side, Ashurst LLP is acting on three of the UK’s largest projects: the £4bn Stratford City retail development, 122 Leadenhall Street (the Cheesegrater building) in the City, and the £16bn Crossrail project. Property-related work associated with the impending 2012 Olympic Games kept numerous firms busy, including Berwin Leighton Paisner LLP, which is advising the Olympic Delivery Authority on post-Games site development.

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