Commercial real estate investors renewed appetite for debt

Despite the fact that many investors seem concerned about the potential for a Labour government after Thursday’s election there is a growing appetite for debt amongst UK commercial real estate investors. According to a report out today, more than 50% of UK commercial property loans were made on a loan to value ratio of 65% or more. This compares to a figure of 35% in the previous six-month period suggesting that demand for UK commercial real estate is still very strong. While this demand is unlikely to reduce in the short to medium term there is some concern that the loan to value ratios, last seen just prior to the 2008 mortgage crisis, could cause problems in the future. So, why are so many UK commercial real estate investors happy to borrow on such high risk terms and why are financial operations happy to take on these arrangements?

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