There were £846m worth of write-offs in the sector, down from £2.27bn the previous year, between October 2015 and the end of the third quarter of 2016.
Many banks have tightened their lending criteria to commercial property developers, according to peer-to-peer (P2P) property funding platform Saving Stream.
Some banks have slashed their lending to property developers, even, at times, when the development has been pre-let to a tenant, while other banks have demanded more collateral from borrowers.
As banks become more risk averse to schemes where the tenants aren’t blue-chip firms or public sector organisations, alternative lenders and P2P platforms could be well-placed to benefit from the market.
"The risk is that many sensible property investments and developments are not able to get funding from traditional sources," said Liam Brooke, co-founder of Saving Stream.
"A good crop of what are still high quality investment opportunities need funding, and P2P investors are taking on that risk that Basel III has dissuaded banks from getting involved with."