An estimated 64% of real estate lenders expect loan originations to rise in 2021, according to data collected by Link Group.
More than half of real estate lenders (52%) expect to expand their team in 2021.
The majority (69%) consider COVID-19 to be the key risk factor to the UK commercial real estate market for 2021.
Real estate finance lenders blindsided by COVID-19
The research also shows that, last year, more than two thirds (77%) identified Brexit uncertainty as the main market risk, but this has plummeted to just 2% in 2021.
A UK recession was the second biggest risk factor (12%) to the stability of the UK CRE market in the year to come.
The availability of loans has dropped across all sectors except industrial and logistics.
Loan pricing has remained relatively static, with a drop in pricing in the preferred equity space from 13% to 10% to make up for the lower leverage on offer.
Ireland is registering the biggest surge in appetite among real estate lenders with a 14% increase on 2020, taking it ahead of Western Europe as the most popular non-UK European location.
Tim Schuy, head of real estate finance at Link Group, said: “The last year has brought extraordinary change to the real estate market, and with it, we have seen huge opportunities develop.
“As the UK’s big clearing banks stepped back from new business so as to limit the impact of what is now riskier lending on their capital ratios, the field has opened up for alternative lenders to meet demand for refinancing and new project funding.
“This has resulted in overall stability in pricing and limiting the reduction in sector-specific availability.
“Levels of uncertainty in the sector are certainly higher than usual, something that is to be expected in the wake of a once-in-a-generation global pandemic.
“We will have to wait and see just how quickly and sustainably the economy can reopen and what that means for the real estate market.
“But the levels of optimism within the sector are hugely encouraging, and lenders are eager and well placed to seize the growth opportunities that the next 12 months provides.”
