Does the banking crisis mean less property lending?
Knight Frank's global head of research, Liam Bailey, is joined by head of debt advisory, Lisa Attenborough, to assess the fallout for developers and investors from rolling banking turmoil.
1 minute to read
Following the collapse of banks across Europe, the US and and the UK, the real estate market has been embraced for fallout.
UK economic stress
Liam and Lisa rewind to the impact of the mini-budget following the short premiership of Liz Truss towards the end of 2022. Following a surge in swap rates across the UK, a number of transactions across the board started to fall over due to the high cost of debt.
Moving forward to March this year, Silicon Valley Bank was in the news as it collapsed, largely affected by spiking interest rates which prompted a bank run, with federal regulators taking control.
The banking crisis spread across Europe into Credit Suisse in Switzerland, bought out by rival bank UBS and Deutsche bank in Germany saw its shares fall sharply.
How have lenders reacted?
Lisa explains why banks are likely to become more risk averse but real estate finance is still available.
Lisa says there is still appetite in the market and that lenders are still keen to lend into living sectors, but the general consensus is that lenders will start to tighten credit conditions.
Build to rent investment stock and purpose built student accommodation (PBSA) have shown to be resilient, with PBSA proving to be counter-cyclical.
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