New lending to commercial property increased by over 50% and reached a six-year high in 2014, as non-traditional lenders entered the commercial real estate (CRE) market at record levels, according to the independently compiled De Montfort Commercial Property Lending Report. 

The value of commercial property loan originations soared to £45.2bn at year-end 2014, compared with £29.9bn in 2013, the highest figure since new lending reached £49.82bn in 2008.

At year-end 2014, insurance companies and other non-bank lenders accounted for 25% of new loan originations. Outstanding debt also saw increased diversity, with insurance companies representing 12.7% of the total debt, up from 10.2% last year, and other non-bank lenders representing 6.5%, almost doubling their 2013 share of 3.7%. These lenders have only been accounted for since 2011, when – according to the report: “secured lending to commercial property [became] more attractive to these organisations due to regulatory changes and business opportunities created by the withdrawal of banks from this sector.”

The market seems mostly to have worked through the legacy of pre-crisis loans that characterised the last few years. The value of distressed loans more than halved in 2014, falling from £44.7bn at year end 2013 to £21.1bn at year-end 2014, supported by a strong recovery in the underlying property market as well as an improving UK economy more generally.