News / From the associates

The report, based on responses from 143 of Europe’s leading lenders, provides an up-to-date snapshot of sentiment in the real estate credit market, highlighting concrete signs of recovery. The market appears to be gradually returning to normal, with an increasing supply of financing, more competitive pricing conditions, and a growing focus on the ESG quality of financed assets.

After two years of “low activity,” nearly 80% of lenders expect an increase in lending, with particularly positive expectations among non-bank operators, such as debt funds and insurance companies. At the same time, the perception of geopolitical risk is growing—cited as critical by 70% of respondents—and fears of a recession have risen significantly in importance compared to 2024.

Demand for loans is driven primarily by refinancing, partly due to the numerous maturities linked to the previous interest rate cycle. However, interest in acquisition-related financing is also increasing, while the share for development remains stable—above 20%. From a sector perspective, multifamily is the most attractive segment, followed by logistics and hotels, with signs of recovery for PBSA, retail, and data centers, although the latter remain accessible only to a portion of the market. Over 80% of lenders say they are willing to finance alternative assets, with strong interest in the living segments—student housing, senior housing, and co-living—and a strengthening trend in self-storage. Loan-to-value ratios remain stable, generally between 50% and 60%, with minimal differences between banks and non-bank lenders. Multifamily shows a wider range, while data centers exhibit greater variability but a more cautious approach.

Margins have narrowed compared to 2024, with significant reductions in some cases: for example, up to 50 basis points lower for hotels and 40 for retail. For prime assets, the bottom quartile of margins ranges between 150 and 180 bps, with banks tending to offer slightly more favorable terms than non-bank lenders, who are more active in higher-risk assets. The pricing differential between the two categories reaches up to 60 bps in some sectors.
Willingness to finance large-scale transactions is growing: 35% of lenders are ready to disburse over 200 million euros, compared to 14% the previous year. The share of those supporting development projects remains significant, though slightly down, while interest in instruments such as whole loans and mezzanine financing is increasing. In terms of risk approach, over half of lenders expect criteria to remain unchanged, but a quarter are ready to be more aggressive, primarily by adjusting the LTV ratio. Interest rate risk hedging remains a standard practice, required by 84% of lenders, often for at least 70% of the financed amount, using instruments such as caps and swaps.

Sustainability is taking on greater importance: over 70% of lenders do not grant credit to assets lacking ESG criteria or without a restructuring plan, while 57% offer improved terms for those who meet specific environmental and social objectives. Penalties are less frequent but tend to be more severe than incentives. In many cases, ESG plans are monitored regularly and linked to incentive or penalty clauses.