Table of Contents
Executive Summary
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- The market
- New lending rose by 11% in 2018
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- Figure 1: Gross value of annual loan originations, 2014-2018, (£ billion)
- Total outstanding debt rises to five-year high
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- Figure 2: Aggregated value of outstanding debt in loan books secured on UK commercial property, 2014-2018, (£ billion)
- New loan originations to climb by 27% to 2023 but will not reach pre-2008 levels
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- Figure 3: Forecast gross value of annual loan originations, 2019-2023, (£ billion)
- Outstanding debt secured on property to continue rising
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- Figure 4: Forecast value of outstanding debt in loan books secured on UK commercial property, 2019-2023, (£ billion)
- What we think
Issues and Insights
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- Brexit impasse and uncertainty causing changes to mortgage lending strategies
- The facts
- The implications
- Empty and unused properties in London could offer new opportunities
- The facts
- The implications
The Market – What You Need to Know
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- New lending rose by 11% in 2018
- Total outstanding debt rises to five-year high
- New loan originations to climb by 27% to 2023 but will not reach pre-2008 levels
Market Size
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- Methodology
- New lending rose by 11% in 2018
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- Figure 5: Gross value of annual loan originations, 2014-2018, (£ billion)
- Total outstanding debt rises to five-year high
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- Figure 6: Aggregated value of outstanding debt in loan books secured on UK commercial property, 2014-2018, (£ billion)
Category Market Share
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- Non-banks continue to grow presence in new lending
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- Figure 7: Gross value of loan originations, by allocation, 2017 and 2018, (% of total)
Regional Analysis
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- London and South East account for over 60% of transaction value and are home to a third of all completed transactions
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- Figure 8: Commercial property transactions in Great Britain, by region, 2017 and 2018, (value in £ million)
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- Figure 9: Commercial property transactions in Great Britain, by region, 2017 and 2018, (volume in units)
Market Forecast
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- New loan originations to climb by 27% to 2023 but will not reach pre-2008 levels
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- Figure 10: Forecast gross value of annual loan originations, 2019-2023, (£ billion)
- Outstanding debt secured on property to continue rising
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- Figure 11: Forecast value of outstanding debt in loan books secured on UK commercial property, 2019-2023, (£ billion)
- BPF plans aim to modernise commercial property and help improve productivity and growth
The Impact of the Economy
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- Annual GDP growth falls to six-year low in 2018
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- Figure 12: Annual GDP growth rate, 2014-2018, (%)
- Bank rate remains at 0.75%
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- Figure 13: Bank rate, 2008-2018, by date of adjustment, (%)
- Credit demand and availability falls in 2018
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- Figure 14: Availability of corporate credit to PNFCs in the past three months, Q1 2015 - Q1 2019, by business size, (net percentage balance)
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- Figure 15: Demand for corporate credit by PNFCs in the past three months, Q1 2015 - Q1 2019, by business size, (net percentage balance)
Market Trends
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- Commercial property investment falls for third time since 2014
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- Figure 16: Investment in UK commercial property, 2014-2018, (£ billion)
- Commercial lending rates reach calendar year high in April, but remain largely stagnant in 2019 to date
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- Figure 17: Average interest rate for UK MFI new advances to PNFCs, at April in 2015-2019, (% not seasonally adjusted)
Market Drivers
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- Commercial property transactions fall in 2018 but reach 11-year high in April 2019
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- Figure 18: Number of non-residential property transactions, 2014-2018, (seasonally adjusted)
- Write-offs on loans to non-financial companies fell to an eight-year low in 2017 but rebounded in 2018
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- Figure 19: Write offs of loans to PNFCs from banks and building societies, 2014-18, (£ million, not seasonally adjusted)
- Business confidence reaches a decade low at the start of 2019 with uncertainty affecting demand for finance
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- Figure 20: Business confidence index, per half-year, Q2 2009 – Q2 2019, (index figure)
Companies and Brands – What You Need to Know
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- Specialist lenders launch new products targeting under-served sectors…
- … as well as in the buy-to-let market
Industry Structure
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- Changes in the structure of the industry
- Banks and building societies
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- Figure 21: Analysis of changes in the structure of the banks and building societies sector, 2014-2018, (number of outlets and businesses)
- Financial leasing
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- Figure 22: Analysis of changes in the structure of the financial leasing sector, 2014-2018, (number of outlets and businesses)
- Other credit granting
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- Figure 23: Analysis of changes in the structure of the other credit granting sector, 2014-2018, (number of outlets and businesses)
- Structure by turnover
- Banks and building societies
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- Figure 24: Analysis of the financial structure of the banks and building societies sector, 2017 and 2018, (turnover in £000 and number of companies)
- Financial leasing
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- Figure 25: Analysis of the financial structure of the financial leasing sector, 2017 and 2018, (turnover in £000 and number of companies)
- Other credit granting
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- Figure 26: Analysis of the financial structure of the other credit granting sector, 2017 and 2018, (turnover in £000 and number of companies)
- Structure by employment
- Banks and building societies
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- Figure 27: Analysis of the employment structure of the banks and building societies sector, 2017 and 2018, (number of companies and % of total)
- Financial leasing
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- Figure 28: Analysis of the employment structure of the financial leasing sector, 2017 and 2018, (number of companies and % of total)
- Other credit granting
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- Figure 29: Analysis of the employment structure of the other credit granting sector, 2017 and 2018, (number of companies and % of total)
Competitive Strategies
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- Specialist lenders launch new products that target under-served sectors…
- … as well as the buy-to-let market
Company Profiles
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- Barclays PLC
- Recent company activity
- Financial information
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- Figure 30: Financial analysis of Barclays plc, 2014-18, (£ million)
- HSBC
- Recent company activity
- Financial information
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- Figure 31: Financial analysis of HSBC Bank plc, 2014-18, (£ million)
- Lloyds Banking Group
- Recent company activity
- Financial information
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- Figure 32: Financial analysis of Lloyds Banking Group, 2014-18, (£ million)
- Royal Bank of Scotland Group
- Recent company activity
- Financial information
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- Figure 33: Financial analysis of RBS Group, 2014-18, (£ million)
- Santander UK Plc
- Recent company activity
- Financial information
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- Figure 34: Financial analysis of Santander UK plc, 2014-18, (£ million)
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Methodology
Further Sources and Contacts
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- Trade associations
- Trade events
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