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LONDON-New statistics from the Bank of England show that total property lending grew by £2.7 billion ($4.2 billion) in the second quarter of 2002, taking the total loans outstanding to property companies to an all time high of £76.850 billion ($120 billion). Lending is up £13.3 billion ($20 billion) year-on-year.

Rupert Clarke, Managing Director of Jones Lang LaSalle Corporate Finance, said: “The extent of this quarterly increase is perhaps not surprising given that low interest rates and favourable debt terms mean leveraged investors continue to dominate activity in most real estate market sectors.”

Clarke said the downward movement in the medium and long term interest rates has been particularly marked over the last few months and is likely to drive continued activity in leveraged acquisitions during the third and fourth quarters. Currently 5 year swaps rates stand at below 5% compared with around 5.5% a month ago and the average of 7% over the last 10 years.

And a JLL survey found that 12% of all lending was to support speculative development, compared to just 3% in 2001. The broker said this increase appears to follow the market view that occupiers’ demand would increase by mid to late 2003.

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