The Real Deal New York

American banks aren’t lending to British property owners like they used to

Prices are at record highs, and North American lenders are growing more cautious
October 11, 2017 09:20AM


Lenders in North America and elsewhere are pulling back on credit they’re willing to provide for commercial properties in the U.K. as prices remain at record highs and uncertainty lingers over Brexit.

North American banks provided $861 million for commercial real estate in the six months through June, a 58 percent drop from the previous year, according to a survey of 78 lenders by De Montfort University. British banks and member-owned lenders advanced $10.8 billion for commercial properties in the first half of this year, a 14 percent fall from last year, Bloomberg reported.

“There is definitely more caution around property values,” Nicole Lux, senior research fellow at the university told Bloomberg. She said that loan-to-values “could quickly rise if prices fall.”

The demand for credit, however, has been curbed somewhat by Hong-Kong-based investors, who purchase commercial property with financing from domestic banks. Such deals were not reflected in the university’s survey. [Bloomberg] — Kathryn Brenzel