Lending secured against commercial property in the UK is set to
reach a new post-crisis high this year.  It's expected that a
rise in new acquisitions of sites outside London will fuel the
rise.

More than £11bn of loan requests were received by real estate
financiers during the second and third quarters of last year,
excluding the volumes of off-market deals such as loan
extensions.

As a result, property companies are on track to exceed the £45bn
worth of financing from banks and other institutions offered last
year.

Emma Huepfl, co-principal at Laxfield Capital, said:

"If you look at the patterns of demand, it is spreading out
regionally - there are a lot of acquisition-related regional
finance requests,"

"This isn't just about property being a core defensive
investment. It's following the real economy, and demand for assets
and rental growth in the regions."

Loan-to-value ratios were measured at 56 per cent, a fairly
conservative figure, with highly leveraged requests (loans worth at
least 70 per cent of the property value) declining slightly.

Almost half of loan requests during the period were for higher
than 65 per cent of the values, a considerable increase over the 25
to 35 per cent average loan-to-value rations found in the UK's
biggest listed property companies.

Ms Huepfl highlighted that a steep rise in property valuations
would mean that any substantial downturn - one along the lines of
the 2008 crash - would leave a substantial number of loans
exceeding the values of the properties used to back them.

Commercial property values have risen by an average of 38 per
cent since 2008.

Around 60 per cent of finance requests made in the six months
related to new acquisitions rather than refinancing.  Also,
for the first time in a number of years, loan requests outside
London exceeded London lending.

Regional projects made up 54 per cent of loan requests for all
new development projects: this was a steep increase on the 20 per
cent or less measured during the preceding two years.

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