Lenders have increased appetite but lack product

Development finance is back

(lifePR) ( Frankfurt am Main, )
International real estate advisor Savills has named yesterday (16 March 2010) the UK commercial property market's top 21 lenders for 2010 with an appetite to lend from £30 million upwards.

Savills previously published in October 2009 a list of 23 lenders with ambitions to lend from £20 million upwards. Savills has since increased its definition of bigger ticket lending from £20 million to £30 million in recognition of an increased appetite for lending across the market. Many other lenders, including lenders no longer appearing on Savills bigger ticket list, continue to be active in the smaller lot sizes above £10 million. New additions to Savills' list are Aareal Bank, Bayerische Landesbank and Deutsche Bank, all of German origin. Indeed, of the list of 21 top lenders, 13 (60%) are German lenders.

- Aareal Bank
- Aviva
- Bank of London and Middle East
- Barclays Bank
- Bayerische Landesbank
- Canada Life
- Deka Bank
- Deutsche Bank
- Deutsche Pfandbriefbank
- Deutsche Postbank
- D G Hyp
- Eurohypo
- Helaba
- ING Real Estate Finance
- Landesbank Baden-Wurttemberg
- Landesbank Berlin
- Lloyds Banking Group
- Nord LB/Deutsche Hypo
- Royal Bank of Scotland
- Santander
- Westdeutsche Immobilienbank

The firm states that a major feature of the current lending market is a scarcity of good quality lending opportunities, which is holding back lenders from realising their ambitions. Over the past 12 months, fewer commercial investment properties have come to the market, and in many cases the better quality investments have been purchased by cash buyers, often from overseas. This has resulted in fewer opportunities for lenders. One consequence of this is that for better quality property investments, loan to values have increased and interest rate margins have decreased as lenders compete with each other for business.

Savills also reports that the provision of development finance has re-emerged into the market. It has named the following organisations that will provide site acquisition finance and in some cases construction finance:

- Barclays/Barclays Wealth
- Close Brothers
- Eurohypo
- HSBC/HSBC Private Bank
- Investec
- Lloyds Banking Group
- RBS/Nat West/Coutts

William Newsom, Savills UK head of valuation, says: "I am very pleasantly surprised by the number of lenders who are prepared to provide development finance, mostly for residential schemes. In the late 1990s the development finance markets were closed for half a dozen years. In this cycle we have seen the markets reopen again after only two years albeit on cautious terms."
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