Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

More U.K. Banks Look to Increase Their Development Loans

Oct. 5 (Bloomberg) -- More U.K. banks are prepared to lend money for real estate developments than they were a year ago on expectations that the British economy will recover more quickly than elsewhere in Europe.

U.K. lenders saying they are likely to provide development project finance in the coming five years rose to 66 percent from just over half of respondents a year earlier, according to an annual survey published today by construction consultant EC Harris. In mainland Europe, there was a 7-point drop from last year to 48 percent because of concerns over the euro region’s sovereign-debt crisis.

Banks account for 94 percent of real estate lending in Europe, or 2.4 trillion euros ($3.1 trillion), and may reduce loans by as much a 25 percent in the next three to five years to meet tougher capital rules, Morgan Stanley estimates. Just 17 percent of respondents in the EC Harris survey said they increased real estate lending in the past 12 months, while 48 percent reduced their loan books.

The research indicates that fewer banks are willing to finance projects outside their home market, EC Harris said. The exception is Spain, it said.

Few banks would be willing to provide loans for projects without a tenant commitment to lease part or all of a proposed development. Seventy-four percent said they would lend for real estate planned by developers that have backing from established investors, such as money managers or sovereign-wealth funds.

EC Harris, a unit of Arcadis NV, surveyed 29 banks that provide loans backed by real estate in eight European countries.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.