The Scottish office of property advisor Jones Lang LaSalle has predicted increasing caution by commercial property lenders in Scotland as their exposure remains significant and the 'rising cost of debt bites harder'. Direct real estate investment in the UK reached a record £27 bn during the first half of the year a 6% increase on the same period last year. Figures released by the Bank of England show a continued growth in lending to real estate, with the total outstanding debt increasing by £8 bn in the second quarter of 2007, despite several interest rate rises over the course of this year. The total amount outstanding to real estate now amounts to £175 billion, representing 11.2% of the total outstanding debt in the wider market. As a proportion of total debt, this is the highest level ever for real estate since records began, JLL said.
The Scottish office of property advisor Jones Lang LaSalle has predicted increasing caution by commercial property lenders in Scotland as their exposure remains significant and the 'rising cost of debt bites harder'. Direct real estate investment in the UK reached a record £27 bn during the first half of the year a 6% increase on the same period last year. Figures released by the Bank of England show a continued growth in lending to real estate, with the total outstanding debt increasing by £8 bn in the second quarter of 2007, despite several interest rate rises over the course of this year. The total amount outstanding to real estate now amounts to £175 billion, representing 11.2% of the total outstanding debt in the wider market. As a proportion of total debt, this is the highest level ever for real estate since records began, JLL said.
Foreign investors are increasingly injecting significant amount of money into the UK market. During the first six months of 2007, foreign purchases totalled £12.5 bn, accounting for over 45% of all transactions. JLL said this is supported by the latest Bank of England data, with lending in sterling by US and Japanese owned banks increasing by 70% and 35% respectively in the second quarter of 2007.
Alasdair Humphery, director of JLL Scotland, predicts that credit lines will tighten. 'Over the next six months we anticipate greater caution to be displayed in the market with the level of investment activity cooling slightly in certain sectors as the availability of credit tightens.'
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