The eagerly awaited annual report from De Montfort University provides the hard facts to back up the observation that many were keen to make as 2015 drew to a close: the UK commercial real estate (CRE) financing market was in fine fettle.
Indeed, the total outstanding book grew in size for the first time over a one-year period since the end of the Global Financial Crisis, with strong activity in the second half of the year making the difference (up to mid-year it was still a story of decline).
Whether this momentum can be sustained in 2016 is, as we have previously reported, at the mercy of unusual and unpredictable circumstances. If the UK votes in June to remain in the European Union – the outcome which the market appears to overwhelmingly prefer – then many predict another fruitful second half. But if the ballot box verdict goes the other way, a lack of confidence in the lending environment may result in a protracted period of caution.
While the De Montfort report showed the non-bank share of loan origination falling last year overall, their share of development loan origination was on the up. This ties in with the sentiments expressed by those we canvassed for our special report on development finance in this issue. Traditional bank appetite in the development arena is limited and borrowers are subject to rigorous check-lists – in light of which, small wonder that alternative sources are being tapped.
In Spain, we also find caution from the domestic banking community. Here, however, the circumstances are rather different. Up until now, the banks have confined themselves to the side-lines through the early period of the country’s recovery. Though still timid, and while certainly not embracing development finance at this point, they are nonetheless returning to the fray.
One debt fund which clearly has big ambitions, as it sets about raising its debut vehicle, is Venn Partners. In this month’s Profile, we find out more about its aspirations when it comes to UK PRS loans and Dutch home mortgages. Again, the message is one of exploiting reticence from the traditional banks. “We are trying to step into some of the performing and asset-backed loan spaces where the banks have stepped back,” Gary McKenzie-Smith, one of the firm’s co-founders, tells us.
This issue also has a fascinating article on the subject of loan ‘drops’ and how the proportion of such drops appears to differ greatly between the banks and non-banks (we’ll leave you to peruse the feature to discover exactly how); as well as a focus on the US industrials sector.
Join us again for the July/August issue, when a certain vote in the UK will be even more talked about than it is now.