Editor’s letter: Expansion amid contraction

Andy Thomson
Andy Thomson

We have heard a lot of theories about what may or may not have happened in the UK lending market in the first half of this year, but now, thanks to the work of the De Montfort University report authors, we have the raw data to examine.

What it tells us is that UK commercial property lending did indeed see a contraction, falling 13 percent compared with the same period a year earlier as uncertainty around the then-upcoming European Union membership vote ensured caution was the watchword. The big vote, with its ultimately dramatic result, was not the only factor however – market observers say there was a natural cooling off anyway as the cycle continued to mature.

In the second half of 2016, wariness over market conditions has continued – as evidenced by many of the sentiments expressed at our recent Finance Forum: Europe event in London. The stage of the cycle, together with the uncertainty around both the timing and nature of Britain’s exit from the EU, have combined to make both borrowers and lenders nervous about the UK.

However, it was not just the UK market where discipline was being urged: the same also applied to the likes of Germany, France and increasingly the Netherlands as well. Moreover, some lenders see opportunity in the UK regardless of recent turbulence. We also discover why German insurer Allianz is expanding its European activities to the country.

Also looking to expand are the debt funds, for reasons explained in our summary of Finance Forum: Europe. Among the pioneers in this category of lender is DRC Capital, which was one of the first non-bank property lenders in Europe. We find out more about the firm’s current activities – including its involvement in the glamorous Pinewood Studios deal – and how it views the future.

While there may be a somewhat subdued feeling among European lenders generally, there is plenty of excitement around the residential and multifamily sector. In a special report, you will find four features examining developments in Germany, Ireland, the UK and the US.

In this issue, we also have a review of the huge EXPO Real trade fair in Munich; a feature investigating trends and recent developments in the Swedish market; a look at how regional banks are winning CRE market share in the US; and a case study about the huge Hudson Yards project in New York. On top of this, we have our regular round-up of key data, starting with recent lending deals.

Enjoy the issue,

Andy Thomson