This edition first published 2018
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Library of Congress Cataloging‐in‐Publication Data
Names: Jones, Colin, 1949 January 13– author. | Cowe, Stewart, author. | Trevillion, Edward.
Title: Property boom and banking bust : the role of commercial lending in the bankruptcy of banks / Colin Jones, Stewart Cowe, Edward Trevillion.
Description: Hoboken : Wiley‐Blackwell, 2017. | Includes bibliographical references and index. |
Identifiers: LCCN 2017031759 (print) | LCCN 2017043453 (ebook) | ISBN 9781119219200 (pdf) | ISBN 9781119219217 (epub) | ISBN 9781119219255 (paperback)
Subjects: LCSH: Real estate investment. | Commercial real estate. | Mortgage loans. | Financial institutions–Real estate investments. | Banks and banking. | Global Financial Crisis, 2008–2009. | BISAC: BUSINESS & ECONOMICS / Real Estate.
Classification: LCC HD1382.5 (ebook) | LCC HD1382.5 .J666 2017 (print) | DDC 332.109/0511–dc23
LC record available at https://lccn.loc.gov/2017031759
Cover Image: © MarianVejcik/Gettyimages
Cover Design: Wiley
To Fiona and Louyse for their patience and understanding during the preparation of this manuscript.
For Margot for her constant support over many years and to Adriana who encouraged me to put pen to paper.
1.1 | Nominal and real capital value growth 1971–1977 |
1.2 | Nominal and real capital value growth 1987–1997 |
1.3 | Real commercial property capital values 1981–2010 (1981 = 100) |
2.1 | Quarterly cash flow into specialist (retail) real estate funds, 2001–2007 |
3.1 | Global debt outstanding in 2000 and 2007 broken down by sector |
3.2 | Commercial property capital growth in selected countries |
3.3 | Total property debt as a percentage of invested stock in different parts of the world 1998–2009 |
3.4 | Commercial real estate lending as a percentage of annual UK GDP 1970–2011 |
3.5 | Annual bank lending for property in the United Kingdom 2000–2010 |
3.6 | International sources of bank lending in the United Kingdom 2004–2010 |
3.7 | Bank base rates and 5‐year swap rates 2000–2010 |
3.8 | Average interest rate margins for bank lending to commercial property 2002–2011 |
3.9 | Average interest rate margins on prime and secondary retail properties 2002–2012 |
3.10 | Differences between initial yield and funding costs 2000–2010 |
3.11 | Average maximum loan to values on commercial property lending by banks 2002–2012 |
3.12 | Office development in London 1985–2011 |
3.13 | Annual retail warehouse space completed 1993–2014 |
3.14 | Annual completions of town centre and out‐of‐town shopping centres 1965–2014 |
4.1 | Annual US economic growth and commercial property returns 1978–2014 |
4.2 | Annual UK economic growth and commercial property returns 1978–2014 |
4.3 | Commercial property capital growth in selected countries 2000–2009 |
4.4 | Long‐term capital and rental value growth patterns 1975–2015 |
4.5 | Annual contributions to capital growth 1981–2007 |
4.6 | Quarterly capital and rental value growth in the retail sector 2000–2009 |
4.7 | Quarterly capital and rental value growth in the office sector 2000–2009 |
4.8 | Quarterly capital and rental value growth in the industrial sector 2000–2009 |
4.9 | Net quarterly institutional investment into commercial property, 2001–2009 |
4.10 | Net quarterly institutional investment in the UK property sectors, 2001–2009 |
4.11 | Indices of the annual real value of institutional purchases by property sector 1981–2010 |
4.12 | Indices of the annual real value of institutional sales by property sector 1981–2010 |
4.13 | Value of commercial property transaction volumes, 2000–2009 |
4.14 | Weighted average yield of property purchased by investors compared to the market average in 2006 |
4.15 | Patterns in retail sales of property fund units to investors and commercial property values, 2000–2009 |
4.16 | Yield gap between yields on gilts and commercial property, 2001–2009 |
5.1 | Office yields in the United Kingdom and Western Europe 2007–2015 |
5.2 | Office yields in EMEA countries and the Americas 2007–2015 |
5.3 | Yield trends in the Asia Pacific region 2007–2015 |
5.4 | Indexed capital value and rental value change in the UK property market 2000–2014 |
5.5 | Indexed capital value change by sector, 2000–2009 |
5.6 | Contributions to capital growth, 2000–2009 |
5.7 | Peak to trough change in capital values by length of unexpired lease |
5.8 | Peak to trough changes in capital values by asset quality defined by value |
5.9 | Net investment by financial institutions by property sector, 2006–2014 |
5.10 | Transaction volumes in the commercial property market 2000–2015 |
5.11 | Market and valuation yields, 2007–2010 |
5.12 | Yield Spreads of Sales by Investor Types, 2007–2009 |
5.13 | Quarterly cash flow into specialist (retail) real estate funds 2000–2015 |
5.14 | Yield gap between gilts and commercial property, 2001–2009 |
6.1 | Major UK banks’ customer funding gap, 2000–2008 |
6.2 | HBOS property and property related exposures, drawn balances at November 2008 |
6.3 | HBOS impaired loans as a percentage of year‐end loans and advances, 2000–2009 |
6.4 | HBOS monthly impairment losses charged to the income statement in 2008 |
7.1 | Actual and forecast 10‐year gilt yield gaps, 1987–2013 |
7.2 | Actual and forecast index‐linked gilt yield gaps, 1987–2013 |
We thank MSCI for permission to use its data on worldwide property trends. We also thank Property Data for permission to use their UK transactions data. Both of these data sources represent the essential empirical base for the book. We also acknowledge the support of CBRE, the De Montfort UK Commercial Property Lending Survey, the Investment Property Forum and Real Capital Analytics in giving permission to reproduce figures from their reports.