Banks 'continue to cut commercial property lending'

Banks continued to reduce their lending to the commercial property sector towards the end of last year, new research has revealed.

According to Jones Lang LaSalle, figures from the Bank of England have revealed that total lending to real estate dropped by £2 billion in the final quarter of 2009, with the volume falling to its lowest level since June 1997.

Jeremy Handley, director of the company's valuation advisory team, said the figures may be "surprising" to many considering the increase in investment activity seen at the prime end of the market.

He added: "Many banks, particularly the German lenders, are now back in the market and finding that there is strong competition between banks to secure the best product.

"However, equity remains plentiful for the right opportunities and many vendors who are repaying debt are not re-leveraging in the short term leading to an overall reduction in debt levels."

At the end of last month, a report by Jones Lang LaSalle revealed that European office occupier markets showed cautious optimism during the final quarter of 2009.