City St George's: Property Lenders Slash Prices Amid Market Slump

May 8, 2026

South London News Smart London Desk Edited By Jimmy Nsubuga

Property owners might soon see better deals as lenders slash prices to win business in a sluggish UK market. New research from City St George's, University of London reveals a fierce competition for loans.

Lenders Cut Prices to Protect Market Share

New lending for UK commercial real estate hit £52.7 billion last year, the highest in a decade. However, with fewer new construction projects, lenders are fighting for market share.

This has led to a price war, with banks and debt funds cutting rates for prime office space. They are also competing on loan-to-value levels and fees.

Debt Funds Gain Ground

Debt funds are emerging as the clear winners in the lending battle. Their market share has surged, while traditional UK banks see theirs decline.

Dr Nicole Lux, Senior Research Fellow at Bayes Business School’s Real Estate Research Centre, said: “For generations UK banks were the dominant force in commercial real estate lending but last year their share of the market fell from 40 per cent to 36 per cent.”

She added: “Debt funds were the clear winners in this process – increasing their market share from 12 per cent to 28 per cent.”

Growing Anxiety in the Market

Despite the increase in lending, global events are causing anxiety. The US-Iranian conflict and the collapse of a UK bridging lender have dented positive sentiment.

Dr Lux noted: “These developments have focussed attention on the risk of asset-based lending where there are loose risk monitoring standards and a lack of regulatory control and audit.” This anxiety has spread to the real estate lending sector.

Stressed Loan Portfolios

Interest cover ratios remain stressed across loan portfolios. This means that even a small issue, like losing one tenant, could lead to a loan payment default.

Development Finance a Growth Area

Development financing is a key growth area for lenders. They are keen to fund logistics, residential, and student housing projects.

Author

South London News Smart London Desk Edited By Jimmy Nsubuga

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