Investment in UK commercial property has ‘fallen significantly’ since the credit crunch, according to Jones Lang LaSalle, despite figures from the Bank of England suggesting lending to commercial real estate is at its highest ever level.
Bank of England figures released on Friday suggested that bank lending to real estate in the UK grew by £10.5bn in the third quarter of 2007, with the total outstanding lending to real estate up to £186bn, the highest ever recorded as a proportion of total lending.
However, Jones Lang LaSalle pointed out that the figures reflected the strong levels of activity recorded in July, prior to the credit crunch. It said that investment volumes in the UK had fallen significantly in the aftermath of the credit crunch, with large lot size deals, principally central London offices and shopping centres, most affected. It said that bank lending to commercial property may have reached its peak.
Jeremy Handley, director in valuation advisory at Jones Lang Lasalle, said: ‘We anticipate a slowdown in lending over the next quarter to reflect the marked reduction in activity as investors continue to adopt the “wait and see approach” in a market where investment sentiment remains hesitant.’
He added: ‘The latest Bank of England figures are at variance with current sentiment in the UK real estate and finance market. We therefore expect the Q4 figures to reflect a much lower rate of growth.’