MIPIM Highlights the Problems of Property Lending

12th March, 2012.

MIPIM Highlights the Problems of Property Lending

By Justin Marshall, Investment.

My colleague Charles D’Auncey may well have been leading the commentary on property funding in his Blog of 22nd February as I have just been reading the piece put out by Cushman & Wakefield at this year’s MIPIM about ‘lenders pull back from property’.  The report highlighted one of the solutions to this problem though, which Charles also put forward.

Firstly, the news that the number of banks willing to lend to European property investors dropped by a third in 2011, as banks focused on the ongoing need to deleverage.

Cushman’s predict, however, that alternative finance providers such as insurers, pension funds and specialist managed debt funds will become more established and active.  However it does not expect them to adequately fill the debt funding gap, at least in 2012.

This is precisely the point that Charles D’Auncey was making about ‘tapping into the huge funds available in pension schemes and successful property companies’ and the like.

Michael Lindsay, Head of Corporate Finance, at Cushman & Wakefield, said: “The findings of our lender survey show the severity of bank withdrawal from the European commercial real estate debt market over the past year.  Looking ahead, the bright star is the increased lending activity and intentions of non-bank financial institutions and the potential arrival of senior debt funds this year which will provide some welcome new sources of liquidity.”

At Harris Lamb, working with Andy Lamb and Peter Wood on our investment brokerage work, we are seeing the signs too of property companies and funds looking more imaginatively at placing capital in projects to produce the sort of returns that make it worthwhile coming out of the Gilts, Shares and Bonds where some money and reserves have been ‘tucked away’ for the last few years.

Justin is a successful Investment Broker working in Harris Lamb’s Investment Team. If you would like to speak with him about any aspect of Commercial Property Investment, he can be reached on 0121 4559455 or via email: justin.marshall@harrislamb.com

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