Appetite up in overseas property lending

LONDON (Reuters) - The international real estate lending market has improved in the second half of 2009, with more banks willing to lend sums over 20 million pounds on British commercial property, a survey by real estate consultancy Savills (SVS.L) showed on Tuesday.

Savills said the greater appetite to lend was due to greater stability in global financial markets and a narrowing in the gap between base rate and Libor to 20 basis points (bps), from its 160 bps peak in the fourth quarter of 2008.

"Furthermore the disparity between the average property yield and a bank's own cost of funding ... has never been greater," Savills said in a statement. "This means banks can lend on secure and very profitable terms."

Savills said it had identified 23 banks prepared to lend sums of more than 20 million pounds, with German banks accounting for nearly half of that total, via bilateral loans secured against commercial and/or residential property in Britain.

Business volumes were still down due to the scarcity of good quality commercial property assets and cautious lending policies, said Savills' UK head of valuation, William Newsom. "For the first time in years I am not aware of any significant new lenders looking at coming into the market despite these favourable conditions," Newsom said.

"In March when we conducted our last survey, we weren't aware of any banks prepared to lend above 100 million pounds on their own, but today perhaps half a dozen are prepared to do so," he said. Savills' data showed property sales above 10 million pounds fell 41 percent to 165 in the first half of 2009, compared with the same period a year earlier. In the 20 million pounds to 50 million band, 63 deals were done, with a further 26 recorded in the 50 million pounds to 100 million range.

Of the 11 properties traded with a value of 100 million pounds to 200 million, only one definitely did not raise debt, while seven did so, Savills said.

Only five property assets were traded at more than 200 million pounds and four of these had debt attached to them.

(Reporting by Andrew Macdonald; Editing by David Holmes)