Bank lending to property continues to decline – Jones Lang LaSalle
The latest Bank of England quarterly lending figures have highlighted a further decline in UK bank exposure to the property sector, to 8.3% of all debt in Q4 2012, notes Jones Lang LaSalle.
Jeremy Handley, director of valuation advisory at Jones Lang LaSalle, says the drop in outstanding real estate debt is a trend that has been ongoing since the start of 2010, and is the result of low levels of lending and continued deleveraging by banks. “We see no obvious sign of the Funding for Lending programme having significant effects on the amount of new real estate debt,” he adds.
Although total pricing is at historically low levels, the appetite for debt remains limited, says David Lebus, senior consultant Corporate Finance at JLL. He says this is creating competition between banks, where borrowers are seeking debt to fund prime transactions. However, he notes that “while many banks remain risk-averse, there are signs from a number of lending institutions that they have aggressive plans for 2013”. He also expects to see more lending at the secondary end of the market this year, as new debt funds start to spend the money they raised in 2012.
