Savills has named the UK commercial property market’s top lenders for the second half of the year and said the number of banks willing to lend more than £20m has almost doubled to 23 since March.
The property services company’s research, compiled from a database of 100 lenders, reveals that German Banks continue to dominate the 23 lenders in the £20M+ category, who will lend on their own or team up with another lender. The lenders are:
- Bank of London and Middle East
- Barclays Bank
- Canada Life
- Coutts & Co
- Deka Bank
- Deutsche Pfandbriefbank
- Deutsche Postbank
- D G Hyp
- ING Real Estate Finance
- Landesbank Baden-Wurttemberg
- Landesbank Berlin
- Lloyds Banking Group
- Munich Hyp
- Nationwide BS
- Nord LB/Deutsche Hypo
- Royal Bank of Scotland
- Westdeutsche Immobilienbank
Savills says the increased appetite is due to restabilisation of the finance markets following a period of high volatility over the past two years, during which the gap between the base rate and London interbank offered rate (LIBOR) reached a high in the fourth quarter of 2008 at 160 basis points.
The gap between the base rate and LIBOR today stands at around 20 basis points which has led to a reduced cost of bank funding. Furthermore the disparity between the average property yield and a bank’s own cost of funding, Savills says, has never been greater which means banks can lend on secure and very profitable terms.
William Newsom, Savills UK head of valuation, says: “Major names have stated strong ambitions to lend in the property market following pricing corrections and a reduced cost of funding. In March when we conducted our last survey, we weren’t aware of any banks prepared to lend above £100m on their own, but today perhaps half a dozen are prepared to do so.
“Despite this, lenders are treading a path of prudence. Business volumes remain reduced due to a scarcity of good quality product and cautious lending policies as property remains largely out of favour with bank bosses. For the first time in years I am not aware of any significant new lenders looking at coming into the market despite these favourable conditions.”
Savills says that during the first half of this year UK property sales above £10m fell 41% to 165 from 281 in the same time period last year, and that 39% of deals transacted were between £10m and £20m. In the price category £20m to £50m 63 deals complete, whilse 26 were recorded between £50m to £100m.
It says: "Of the eleven properties traded with a value of between £100m and £200m, only one definitely did not raise debt whilst at least seven did successfully raise debt. Only five assets traded at above £200m and four had debt attached to them.”