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Dragon warns of wait for funding

Dragons’ Den star and property portfolio holder James Caan has warned that it will remain very difficult to secure funds for development projects for “another two to three years”.

Mr Caan last week announced plans for a new property fund, to be established by his private equity firm Hamilton Bradshaw as a joint venture with ING Real Estate.

But he said the organisation would not be interested in funding new development, which he still saw as too risky in the current climate.

Proposed building projects have ground to a halt across the UK during the credit crunch, with little or no development funding available.

While investors now have a renewed focus on commercial property, it is believed they will primarily seek to buy existing blue-chip buildings.

Asked whether he could see much funding coming through for new development, Mr Caan told Construction News: “I would say probably not in the shortterm. Maybe in another two to three years there will be.”

“I think once you see demand for housing pick up then you may see cash for other developments coming forward.”

The Hamilton Bradshaw Diversified Property Fund is far from Mr Caan’s first foray into property. The recruitment magnate’s corporation has a real estate arm with a portfolio worth more than £35m.

However, he was also one of the investors who took a hit when construction and property services company Erinaceous collapsed last year. Mr Caan admitted he “lost a fortune” on the investment.

Last month Mr Caan announced a £1 billion scheme to provide small interest-free loans to homebuyers.

The celebrity businessman said he hoped the scheme, which offers loans of up to £50,000 to cover buyers’ stamp duty and legal fees, would help “kick-start” the residential sector.

“I genuinely believe the housing market will pick up next year,” he said. “We have £1 billion in that [new loan scheme], and we are expecting other people to look at what we are doing and create similar products. That should create some momentum.”

The dragon said he was also confident of the construction industry, and recruitment for the sector, eventually bouncing back.

Mr Caan has stakes in several recruitment firms – including Eden Brown, which was last week fined more than £1 million by the Office of Fair Trading for anticompetitive behaviour.

He said: “Right now the construction recruitment market is pretty flat.

“That is directly correlated to the drop-off in construction work. Two years ago the company was growing at a prolific pace.

“But am I worried about it? No. I am absolutely convinced it will bounce back.”

Mr Caan – whose company purchased Eden Brown in 2007, after the actions for which the firms were penalisedtook place – said he believed the level of the fine was “unfair” and that Eden Brown was likely to appeal.