A “crisis of confidence” at European banks has led 45% of them to admit they are unlikely to increase lending for property developments.
More than one-fifth (22%) of property lenders at European banks plan to lend less over the next five years and 23% will maintain their current level of lending, according to consultancy EC Harris’s European Property Finance Trends report.
Last year, 3% said they would lend less and 29% said they would lend at the same level.
Almost all respondents (97%) said they were more likely to invest in prelets than in speculative projects.
Office and retail development projects were voted lenders’ most preferred asset types.
Also, 63% admitted they favoured lending in their domestic market rather than overseas because they had better knowledge of their home market.
Matthew Cutts, head of lenders and investors at EC Harris, said: “We are seeing a crisis of confidence among the European banks at the moment. Lenders are waiting until the eurozone situation improves, but this is likely to take some time, so lenders and developers need to work together to find new ways of convincing credit committees to accept manageable project risk.”
joanna.bourke@estatesgazette.com
