Lending to commercial property (Jul. 24)

Net lending to commercial property was positive for the fourth consecutive month in July, albeit by a smaller £520mn. With development lending still negative, this was driven entirely by a rise in lending against standing investments, continuing the trend seen over the last couple of months.

Despite the more modest rise in July, commercial real estate investment has turned a corner. The stabilisation in yields and capital values will mean a further recovery in lending as investor confidence is restored. Nevertheless, we still expect little movement in yields over the forecast despite a fall back in risk-free rates. That would most likely be consistent with only a gradual recovery in transactions.