There has been a “significant uptick” in European real estate lending, but debt funds will struggle to raise money in an increasingly crowded marketplace, according to Cushman & Wakefield Corporate Finance’s European Lending Review.

Last year was “characterised by the return of the leveraged buyer” with lending up by 30% on the previous year and activity “moving steadily” towards new loans rather than refinancing, the report said.

While 41 funds are aiming to raise €22.1bn (£18.2bn) in 2014, C&W estimates that only €5bn will be raised as competition among lenders increases. Funds that are successful in raising cash are likely to “lead the charge” into secondary markets in search of higher returns.

Out of 161 lenders surveyed for this year’s report, 78% said they would be willing to lend to new customers with whom they had no previous relationship, a 19% increase since last year. Meanwhile, the number of inactive lenders continued to decline, with just 15% declaring themselves inactive, compared with 22% in Q1 2013. This compares with the 42% who defined themselves as inactive in Q1 2012.

Lenders to UK commercial property said that they were prepared to lend at higher LTVs than 12 months ago, of up to 60-65%, compared with 55-65% last year. Margins on core UK product have come in to 1.75%-2.5%, compared with 2.5%-3% last year.

Securitisation made a comeback in 2013, with €8.6bn of new CMBS issued during the year – an eightfold increase on 2012.

“With issuance up by 410% in 2013 compared with 2012, the European CMBS market continues to follow the US trend and return to favour. Going forward, the key will be keeping new issues as vanilla as possible, to prevent the over-engineering that was so apparent in the market before the onset of the financial crisis,” said Mike King, senior analyst, EMEA corporate finance at C&W.

C&W forecasts that CMBS issuance will increase to €12bn to €15bn in 2014, with the expectation that multi loan securitisations will re-emerge.