Commercial property lending has jumped by more than 50% to a six-year high, according to data from De Montfort University.
The annual De Montfort Commercial Property Lending report found that the total value of loan originations was £45.2bn at the end of 2014, up from £29.9bn the year before.
The number of loans outstanding declined over the year to £165.2bn, from £180bn in 2013.
Of the outstanding loans, 12.7% were held by insurance companies, up from 10.2% the year before. Other non-bank lenders nearly doubled their share to 6.5% from 3.7% in 2013.
This has helped to decrease the total market share of the top 12 lenders from 72% to 66% in 2014.
Loans at more than 71% LTV declined from 18% of loans to 14.3% by the end of 2014. Those below the 71% LTV ratio rose to 76.7% of the outstanding debt compared with 63% at the end of 2013.
While 82% of firms were looking to expand their loan book in 2014, the report found that development finance was still only for the minority, with only 17 firms willing to lend against a fully prelet development, seven for 50% prelet and just five for speculative developments.
Melanie Leech, chief executive of the British Property Federation, said: “The CRE lending market recovery is now well and truly established, with the further reduction of outstanding loans and the significant fall in the number of distressed loans indicating a healthier and more competitive market than we have seen for years.
“The increasing diversification of lenders has been marked over the past year, and we feel this is broadly positive for the market. Not only will a larger presence of non-bank lenders provide our sector with alternative sources of finance – lenders with different investment horizons and business strategies – a more diverse finance market can also contribute to financial stability by spreading exposure to UK real estate among a greater range of investors.
“We are concerned to see a reluctance to lend to speculative development, however. This is of particular importance for SMEs, whose growth we fear could be constrained if there is not readily-available business space to suit their needs.”