Survey shows banks still reluctant to lend to commercial property

Survey shows banks still reluctant to lend to commercial property



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In the first survey of its kind, the Lenders’ Expectation report conducted by property agent Jones Lang LaSalle has revealed that only a handful of the most well-capitalised banks are willing and able to lend more than £100 million against commercial property.

Since commercial property values suffered an unprecedented slump of over 40% between June 2007 and July 2009 it would appear that lenders are proceeding with the utmost caution in dealing with the sector.

 

According to the survey, just 12% of banks would lend over £100 million against commercial property at present, whilst 35% are prepared to make loans of between £25 million and £50 million. 30% of lenders said they would lend between £50 million and £100 million.

 

The findings of the survey have indicated that it could still be some time before lending to the commercial property sector recovers, despite consistently rising values.

 

There is currently over £250 billion worth of outstanding debt in the commercial property sector, which perhaps explains why not a single one of the banks surveyed said they would make finance available for speculative development until the end of 2011. 

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