Cass UK Lending Survey – Our Thoughts
The myriad crosswinds affecting the sector mean that the release of new data leads, more than ever, to industry experts scouring every data point for signs of what may lie ahead.
The Commercial Real Estate Lending Survey for 2017 launched at the end of April by Cass Business School (previously De Montfort University) highlighted some interesting observations:
- Non-bank lenders now account for 25% of all UK property lending. This is a five-fold increase on 2008 levels and reflects both the appetite from developers and investors for increasingly diversified funding pools, the impact of changing regulations over that time, but also that the complexities of development are being better served by lenders with a closer working knowledge of the process and lifecycle of a scheme.
- Residential development funding exposure still has not recovered to pre-2010 levels. At £15.5bn in 2017, it is still more than 20% down on the previous peak level. However, of the £34.5 billion of undrawn but committed development finance currently outstanding, our estimates are than roughly £21bn of that is allotted to the residential sector. Combined, this puts lenders’ exposure to residential development at more than £37bn. This would suggest that developers and lenders have committed to a strong pipeline of developments and confidence in the sector appears to be sustaining. This continued supply of credit has also applied downward pressure on margins, leading to a more competitive marketplace for lenders.
- Lenders are becoming increasingly specialised, both in sector focus and loan types. This specialisation has been largely driven by changing regulation and, in the case of some non-bank lenders, investor criteria to meet certain returns or specific allocations. We expect this specialisation to continue through 2018 as lenders seek further opportunities to build competitive advantage.
Maslow Capital is a specialist provider of real estate development finance. Since inception in 2009, our focus and reach have expanded exponentially. Maslow Capital is a partner of TPG, the global investment management company with more than $82bn under management. Our product and service portfolio has become larger and more flexible as we offer more tailored loans and higher quantum in loan size (up to £100 million) to take account of our clients’ specific and increasingly technical requirements. Our core residential sector lending has also grown to include other sectors such as student accommodation, specialist living, mixed-use, industrial, office, bridging loans, bridge to develop loans and we are planning further expansion through 2018 and beyond.
Maslow Capital was a sponsor of the Cass UK Lending Survey in 2017 and contributed data and insights reported in 2018.