Number of alternative lenders jumps 30% in 2013

The dominance of traditional bank lenders in commercial real estate (CRE) financing in Europe has decreased rapidly over the past 12 months, reflecting the emergence of alternative debt providers, according to Cushman & Wakefield’s new European Real Estate Lending Review.

C&W's Corporate Finance team analysed the activity of 161 European lenders for the report - encompassing senior, stretch senior and mezzanine debt lenders - to assess lending appetite and identify trends which will shape the European finance market this year.

Although banks accounted for more than half (55%) of all CRE lending analysed in the survey, their market dominance has been diluted in the past 12 months: the proportion of traditional banking lenders has fallen from 67% in Q1 2012.

According to C&W's report, banks are not necessarily lending less, but their market share has been driven down by the presence of new alternative lenders. For example, there has been a 29% increase in the number of debt funds and private equity lenders since Q1 2013.

Based on data taken from the survey, C&W's Corporate Finance team also recorded a significant 30% increase in the amount of capital lent against real estate in the last 12 months. Meanwhile, a 10% rise in the number of active lenders has led to greater competition and a reduction in pricing across European markets.

'With regulatory burdens exerting pressure on the profitability of CRE lending for banks, we expect insurers, debt funds and private equity firms alike, to accelerate the development of their lending strategies,' said Michael Lindsay, head of EMEA Corporate Finance at C&W.