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Alternatives to traditional commercial development finance sought
Investors and developers are looking towards less traditional commercial development finance options as the high-street funding becomes harder to come by.
According to a new survey from researchers at Leicester’s De Montfort University, the development finance on offer for new commercial projects in the UK has ‘continued to dry up’.
This is due to major high-street lenders being put off by the euro zone debt crisis, the co-author of the survey, De Montfort University’s Bill Maxted told Reuters.
“Lending organisations commented that the existing liquidity crisis had been made more acute by the problems of European sovereign debt and the unknown extent of contagion between banks,” Mr Maxted said.
The De Montfort survey offers an in-depth insight into the health of development finance, which plays a huge part in the recovery of the construction sector and, in turn, the UK economy.
The University’s mid-year study revealed that the number of lenders who were willing to finance fully pre-let commercial developments dropped from 52 per cent in June 2010 to just 31 per cent in June of this year.
The number of lenders willing to finance speculative development also fell, from 17 per cent to 15 per cent over the same time period, the study found.
