A survey of real estate lenders conducted at the end of January showed that very few foresaw the potential impact of the coronavirus outbreak.
Just 2% of respondents in Link’s Market Trends Analysis (MTA) cited a pandemic as the biggest risk to the commercial real estate market. At the time, over three-quarters of respondents said Brexit uncertainty was the main risk facing the market.
Most respondents were upbeat about the outlook, with the majority predicting that property prices would remain steady or increase slightly.
The survey also uncovered some significant changes in market dynamics over the course of 2019. Mezzanine debt became significantly cheaper with margins falling by nearly 100 bps. At the same time, the average maximum loan lenders were willing to make fell for the first time in years, suggesting that lenders were seeking to ensure their loan books were diversified.