Following the GFC, commercial real estate lending in the United Kingdom underwent several years of retrenchment, but has now stabilised.
In Standard Life Investments’ monthly Global Outlook report, head of real estate forecasting Simon Kinnie highlighted that in response to the lending curbs introduced in the UK after the GFC, a range of new lenders appeared, attracted by the potential for secure income and long leases that the UK real estate market provides.
“From a negligible presence in 2011, insurance companies and other non-bank lenders now account for around 22 per cent of the outstanding debt market,” Mr Kinnie pointed out.
Further, he noted that the amount of debt secured by UK commercial real estate has fallen from a peak of £250 billion ($423 billion as at 18 August 2016) to approximately £168 billion ($284 billion as at 18 August 2016).
Mr Kinnie also highlighted that despite the global volatility forecast following the outcome of the historic Brexit referendum, “expectations have not changed dramatically”.
“Core European markets are forecast to produce attractive risk-adjusted returns supported by low development and accommodative monetary policy,” he said.
“Recovering markets continue to experience a rebound, generating higher absolute returns,” he added.
Australian mortgage brokers have a significant opportunity to learn from their offshore counterparts as shifting regulation reshapes the mortgage market.
The Adviser’s UK Study Tour 2016 is a two-day London conference that will provide brokers with unique insights into the mature and booming market.