Lending to UK commercial property market still limited | Europe | News

Lending to UK commercial property market still limited | Europe | News

Bank lending to the property sector is still limited according to Jones Lang LaSalle’s 2011 Lenders’ Expectations report, which surveys key lenders to commercial real estate in the UK.

Although more respondents this year were willing to lend between £50 millions and £100 million The survey found that less than 40% of respondents thought they would be lending amounts above £100 million by the end of 2011, compared with around 50% thinking they would do so in last year’s survey.

‘The rollercoaster of financial crisis and sovereign debt continues and it seems certain that the European banking crisis is going to have profound and long lasting implications for the commercial property sector,’ said Jeremy Handley, director, Jones Lang LaSalle Valuation Advisory.

Barry Osilaja, director, Jones Lang LaSalle Pan-European Corporate Finance, added that capital value growth has slowed again, with total returns remaining well below their peak levels.

Indeed, Bank of England lending figures released in February 2011 show lending to real estate over the fourth quarter of 2010 fell by £16 billion to £221 billion between September and December, the largest drop since the series began in 1987.

‘The number of active banks in the property market has also fallen and this will have an impact on the ability to bridge the debt funding gap and consequently put downward pressure on values of secondary assets,’ explained Osilaja.