Commercial property lending reaches post-recession high
NEW lending for commercial property increased by more than 50% and reached a six-year high in 2014, new data from De Montfort University has revealed.
Buoyed by a record number of non-traditional lenders entering the commercial real estate market, the value of commercial property loans soared to £45.2bn at the end of 2014, compared with £29.9bn in 2013.
This is the highest figure since new lending reached £49.82bn in 2008, according to the university’s annual UK Commercial Property Lending Report.
Furthermore, 82% of lenders said they intended to increase the size of their loan books, compared to 60% the previous year.
Lending in the Midlands has remained fairly constant and represents 14% of the total loan book amongst banks, building societies and insurance companies.
Other non-bank lenders have increased their lending in the Midlands, with loans secured on property representing 9% of their book, up from 5% in 2013.
However, they still only loaned £6.1bn out of a total of £45.2bn of new lending in 2014.
David Smith from the Investment Property Forum (IPF) Midlands region, which will be hosting a seminar for its members on the findings of the report, said: “In the Midlands, whilst the larger institutions are buying properties with cash and then refinancing with lenders, small and medium sized property companies can’t afford to do the same.
“They are arranging debt at the point of acquisition, and generally finding greater availability of loans from various sources including the traditional banks, but also the newer challenger banks and debt funds.”
De Montfort University’s report is reputed to be the most comprehensive study of the UK commercial property lending market.
More than 70 lenders contribute to the annual survey, which is highly regarded in the property and finance industries and referenced by the Bank of England.
