A survey of banks on the prospects for real estate sector lending in Europe.
We are pleased to present the Property Lending Barometer 2017, which is the 8th edition of our annually performed survey of banks’ real estate financing. Our report provides an insight into lending market conditions in Europe and also gives a separate snapshot of the participating countries to highlight their unique characteristics.
The purpose of our report is to assess the prospects and sentiment for bank financing in the real estate sector in Europe, based on interviews conducted with bank representatives from 17 European countries.
The overall positive economic environment in Europe shows cause for cautious optimism, as core inflation is likely to stay low, private consumption may pick up slightly, unemployment is gradually decreasing and investment is predicted to expand steadily. Meanwhile, potential changes in the economic and trade policy of the USA and the geopolitical fallout, the upcoming negotiations with the UK regarding Brexit, and continued structural issues about the operations of the European Union are among the notable risks affecting the economies included in our survey.
The positive tendency of increased lending activity in Europe is likely to continue in 2017, supported by eased lending conditions and sustained demand across all loan categories. The growth of the aggregate loan portfolio is being driven by the low general interest rates and favourable housing market prospects. Also, the intensified activity in the debt sales market across Europe, though temporarily slowed due to political shocks in 2016, is expected to continue, with the total value of loan sales likely to exceed EUR 100 billion for the third consecutive year.
This report is an analysis of the findings of our survey of the leading banks active in these countries. The Barometer 2017 includes input from over 90 banks active in these markets, collected primarily via in-depth interviews and online questionnaires. Representatives from leading financial institutions have provided their views on the key issues influencing property lending.
First, this report provides an overview of the European market as a whole, by focusing on key issues such as the strategic importance of real estate financing for banks, the proportion of impaired loans and bank representatives’ views on how to manage these loans. We also consider areas such as various banks’ average and preferred loan/deal size, as well as the length of the loan contract term. Furthermore, the opportunity for new financing and banks’ asset class preferences have also been analyzed.
The second half of the report includes a profile for each country surveyed. In those sections we have addressed the prospects and terms available for developers and investors to finance new real estate developments and income-generating properties, and survey participants’ expectations for the next 12-18 months.
We would like to take this opportunity to thank all of those who participated in this survey. Their co-operation was key to the success of this initiative.
We hope you will find our report informative and enlightening in supporting your future business decisions related to real estate financing. If you would like to receive any clarification or discuss this year’s survey results, please feel free to contact us or any member of KPMG’s Real Estate Advisory Practice.
See the report here.