Table of Contents
Key Insights
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- How has the UK’s decision to leave the EU already affected the market? What further consequences lie ahead?
- Which other factors have influenced development?
- How has commercial property investment changed over recent times?
Introduction
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- Definitions
- Methodology
- Abbreviations
- Market positioning
- The supplier
- The customer
UK Economy
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- Key points
- Overview
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- Figure 8: UK GDP, 2005-2015, (% Quarterly Growth and GDP in £ Billion)
- Figure 9: UK Output, by Industry, 2008-2016, (Index 2012 = 100)
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- Figure 10: Quarters after GDP Peak, 1979, 1990 and 2008, (Number of Quarters and GDP as % of PreDownturn Peak)
- Inflation
- Interest rates
- House prices
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- Figure 11: UK House Price changes, 2004-2016, (12-month % change)
- Consumer spending
- Manufacturing
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- Figure 12: UK Manufacturing, 2013-16, (Index, 2012 = 100)
- Business investment
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- Figure 13: UK GFCF 2005-15, (£ Million)
- Imports
- Exports
Market Factors
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- Key points
- Market uncertainty likely to drive slowdown in growth
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- Figure 14: GDP growth rate, Q1 2012-Q1 2016, (% change on previous quarter)
- Figure 15: GDP Growth Rate, Q1 2012 - Q1 2016, (% change on previous quarter)
- Brexit will change the mortgage market, but exact impact is unclear
- Commercial lending rates show initial signs of rising over 2016
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- Figure 16: Average Interest Rate for UK MFI New Advances to PNFCs, at April in 2012-16, (% Not Seasonally Adjusted)
- Figure 17: Average Interest Rate for UK MFI New Advances to PNFCs, at April in 2012-16, (% Not Seasonally Adjusted)
- Commercial property transactions on the rise
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- Figure 18: Number of Non-Residential Property Transactions, 2011-15, (Number, Seasonally Adjusted)
- Figure 19: Number of Non-Residential Property Transactions, 2011-2015, (Number, Seasonally Adjusted)
- Write offs on loans to non-financial companies fell sharply in 2015
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- Figure 20: Loan Write-offs to PNFCs from Banks and Building Societies, 2011-15, (£ Million, Not Seasonally Adjusted)
- Figure 21: Loan Write-Offs to PNFCs from Banks and Building Societies, 2011-2015, (£ Million, Not Seasonally Adjusted)
- Business confidence has dramatically fallen for the first time since 2013
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- Figure 22: Business Confidence Index, per Half-Year, 2005-2016, (Index Figure)
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- Figure 23: Business Confidence Index, per Half-Year, 2005-2016, (Index Figure)
- Availability and demand for credit from large corporate sector declines in 2016
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- Figure 24: Availability of Corporate Credit to PNFCs in the Last Three Months, Q1 2010- Q1 2016, (Net Percentage Balance)
- Figure 25: Availability of Corporate Credit to PNFCs in the Last Three Months, Q1 2010- Q1 2016, (Net Percentage Balance)
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- Figure 26: Demand for Corporate Credit by PNFCs in the Last Three Months, Q1 2010 - Q1 2016, (Net Percentage Balance)
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- Figure 27: Demand for Corporate Credit by PNFCs in the Last Three Months, Q1 2010 - Q1 2016, (Net Percentage Balance)
- Impact of planning laws on commercial property supply
Commercial Mortgage Market Size
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- Key points
- Investment levels have possibly hit a peak
- Upward pressure on yields due to uncertainty
- Debt rises for first time since 2008
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- Figure 28: Aggregated Value of Outstanding Debt in Loan Books Secured on UK Commercial Property, 201115, (£ Billion)
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- Figure 29: Aggregated Value of Outstanding Debt in Loan Books Secured on UK Commercial Property, 201115, (£ Billion)
- Loan originations continue to rise, but uncertainties could derail momentum
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- Figure 30: Gross Value of Annual Loan Originations, 2011-15, (£ Billion)
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- Figure 31: Gross Value of Annual Loan Originations, 2011-15, (£ Billion)
Commercial Mortgage Market Segmentation
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- Key points
- UK banks and building societies’ share of new loan originations declines
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- Figure 32: Gross Value of Loan Originations, by Allocation, 2011-2015, (% of Total)
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- Figure 33: Gross Value of Loan Originations, by Allocation, 2011 and 2015, (% of Total)
- Offices and retail property still dominate the share of loans allocated, but the industrial and hotel sectors are strengthening their market share
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- Figure 34: Allocation of Outstanding Loans to Investment and Owner-occupied Property, by Type of Use, 2014, (£ Billion)
- Regional analysis of commercial property transactions
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- Figure 35: Commercial Property Transactions in Great Britain, by Region, 2013-16, (£ Million)
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- Figure 36: Commercial Property Transactions in Great Britain, by Region, 2015, (£ Million)
Commercial Borrowing
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- Key points
- Net lending reaches a 10-quarter peak in Q1 2016
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- Figure 37: UK MFIs’ Net Loans to Non-Financial Businesses, Q4 2013 - Q1 2016, by Size of Business, (£ Million, Not Seasonally Adjusted)
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- Figure 38: UK MFIs’ Net Loans to Non-Financial Businesses, Q4 2013 - Q1 2016, by Size of Business, (£ Million, Not Seasonally Adjusted)
- Funding for Lending scheme extended with focus still on small business finance
Market Trends
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- Key points
- Return on property investment
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- Figure 39: IPD UK Annual Property Index, December 2014 and 2015, (December 1980 = 100)
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- Figure 40: IPD UK Annual Property Index, December 2014 and 2015, (December 1980 = 100)
- Development of commercial property yields
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- Figure 41: Prime Market Yields, by Sector, 2013-16, (%)
- Alternative lenders increasing market presence
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- Figure 42: Alternative Lenders’ Activity, by Loan Allocation, 2013 and 2014, (% of Total)
- Figure 43: Alternative Lenders’ Activity, by Loan Allocation, 2013 and 2014, (% of Total)
Brand Communication and Promotion
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- Key points
- Bank ad spend abandoned and diverted towards restoring reputation following recession
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- Figure 44: Advertising Expenditure on Commercial Mortgages, 2010-16*, (£000)
- Press advertising accounts for highest channel spend
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- Figure 45: Advertising Expenditure on Commercial Mortgages, by Media Type, 2010-16*, (£000)
Industry Structure
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- Key points
- Industry development
- Challenger banks on the rise, but still not at the stage to compete with the existing major groups
- Increasing regulation leading to change in mortgage lending activity
- The number of banks and building societies has remained largely unchanged since 2013
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- Figure 46: Number of Banks and Building Societies Operating in the UK, 2013-2016, (Number)
- Figure 47: Number of Banks and Building Societies Operating in the UK, 2013-2016, (Number)
Company Profiles
Aldermore Bank
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- Figure 48: Financial Analysis of Aldermore Bank plc, 2011-15, (£ 000)
- Company strategy
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Barclays PLC
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- Figure 49: Financial Analysis of Barclays plc, 2011-15, (£ Million)
- Company strategy
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HSBC
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- Figure 50: Financial Analysis of HSBC Bank, 2011-15, (£ Million)
- Company strategy
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Lloyds Banking Group
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- Figure 51: Financial Analysis of Lloyds Banking Group, 2011-15, (£ Million)
- Company strategy
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Principality Building Society
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- Figure 52: Financial Analysis of Principality Building Society, 2011-15, (£ Million)
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- Figure 53: Principality Building Society Commercial Lending Segment Analysis, 2015, (£ Million)
- Company strategy
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Royal Bank of Scotland Group
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- Figure 54: Financial Analysis of RBS Group, 2011-15, (£ Million)
- Company strategy
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Santander UK PLC
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- Figure 55: Financial Analysis of Santander UK plc, 2011-15, (£ Million)
- Company strategy
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Shawbrook Bank
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- Figure 56: Financial Analysis of Shawbrook, 2011-2015, (£ 000)
- Company strategy
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- Figure 57: Profiled Companies’ Combined Turnover, 2011-2015, (£ Million)
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Commercial Mortgage Forecast
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- Key points
- Lower economic growth and interest rates will impact mortgage lending
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- Figure 58: Forecast Gross Value of Annual Loan Originations, 2016-20, (£ Billion)
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- Figure 59: Forecast Gross Value of Annual Loan Originations, 2016-20, (£ Billion)
- Total value of outstanding debt set to rise alongside short-term market uncertainty...
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- Figure 60: Forecast Value of Outstanding Debt in Loan Books Secured on UK Commercial Property, 2016-20, (£ Billion)
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- Figure 61: Forecast Value of Outstanding Debt in Loan Books Secured on UK Commercial Property, 2016-20, (£ Billion)
- ... but uncertainties could still peak foreign-led property acquisitions
- Stamp duty changes
Further Sources and Contacts
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- Trade Associations
- Trade Magazines
- Trade Exhibitions
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