Insurance companies offer the most competitive real estate debt terms, according to new research from CBRE.
The agent’s review of the UK senior lending market reveals that insurance companies are offering loan-to-value deals of 69% with margins of 2.4% – some 20-30 basis points below the market average of 66.2% and 2.6% respectively.
CBRE found that insurers now make up 14% of all real estate lenders open to new business in the UK by number. It said that they had been incentivised by Solvency II regulations, strong achievable margins and increasing asset diversification.
The firm added that it believed the sector could account for 20% of all commercial property lending in the future.
Natale Giostra, head of UK and EMEA debt advisory at CBRE, said: “Insurance companies continued to expand their lending capacities throughout 2011, albeit the impact of their growing presence is mainly felt at the very prime end of the real estate market.”
Overall, the number of commercial property lenders in the UK market increased to 70 this year, although the number actively lending fell by 11 to 45.
“We expect there to be a reduction in senior lending market liquidity in the near to medium term, with a continued shift from actively to selectively lending in 2012,” said Giostra.
