Saturday, 10 October 2026
Property lenders across Central and Eastern Europe are showing greater willingness to finance investment and development, but the recovery is taking different forms in Poland, Czechia, Slovakia, Hungary and Romania. While established investors are benefiting from stronger competition for attractive transactions, financing conditions continue to influence which projects can proceed and which developers can participate in the market.
Central and Eastern Europe’s property financing market is gradually recovering from a period marked by expensive borrowing, rising construction costs and uncertainty over asset values. Banks are becoming more interested in extending credit to the sector, supported by improving investment sentiment and the financial resilience of European lending institutions. However, the return of capital is not producing uniform conditions across the region, with differences emerging between national markets, property sectors and the financial standing of borrowers.
The latest regional research indicates that financial institutions are increasingly confident about their property lending activities. KPMG’s 2025 Property Lending Barometer, which examined responses from 47 institutions across ten European countries, found that more than two-thirds anticipated growth in their property loan portfolios. Approximately 51% reported that lending margins had remained unchanged, while more than 40% indicated that margins had declined. The findings point towards stronger competition for suitable transactions, although banks continue to maintain requirements concerning borrower finances, property values and expected project income.
The broader European market is experiencing a similar improvement in sentiment. CBRE’s 2026 European Lender Intentions Survey, based on responses from 134 financial institutions, found that 72% planned to increase their lending activity during the year. The survey also identified greater willingness to consider financing construction projects, suggesting that lenders are becoming more comfortable with development-related risks. Nevertheless, this improvement remains selective, particularly where projects depend on future leasing or sales rather than existing contractual income.
The distinction between greater lending appetite and easier access to financing is becoming increasingly important. A bank may be prepared to expand its property portfolio while remaining unwilling to finance developments that lack committed tenants, sufficient advance sales or substantial financial contributions from their owners. Consequently, increased competition among lenders does not necessarily translate into lower borrowing costs or more favourable conditions for every developer.
Poland remains one of Central and Eastern Europe’s principal markets for property financing, supported by its relatively large investment sector and the participation of domestic and international banking institutions. Established investors can approach lenders with experience in financing offices, logistics facilities, retail properties and residential developments. This creates opportunities for borrowers with strong financial resources and projects capable of producing reliable income.
However, financing conditions remain an important consideration for developers seeking to begin construction. Banks continue to examine the amount of capital investors can contribute, the expected cost of completing projects and the strength of future income or sales. For smaller developers, these requirements can determine whether a project proceeds even when the proposed borrowing margin appears competitive.
Regional research indicates that some Polish lenders have become slightly more flexible about the proportion of construction expenditure they are willing to finance. Nevertheless, the change has been limited, and the broader requirements applied to property loans have remained relatively stable. This suggests that greater competition is improving the financing environment without fundamentally changing the financial commitments expected from borrowers.
Czechia offers a comparatively favourable picture in terms of borrowing margins. Financial institutions participating in regional surveys have reported some of the lowest property lending margins in Central and Eastern Europe, covering both construction finance and loans secured against completed buildings. Czech lenders have also indicated modest flexibility in the amount of development expenditure they are prepared to support.
These developments are encouraging for investors, although they do not mean that all property sectors are experiencing the same conditions. Financing an occupied commercial building differs substantially from supporting construction that depends on future leasing or residential sales. Banks continue to distinguish between developments according to location, expected income, construction risk and the financial resources available to borrowers.
The Czech market therefore illustrates how relatively competitive lending conditions can coexist with selective financing decisions. Established assets with reliable tenants may attract considerable interest, while speculative developments or projects requiring substantial additional equity can face more demanding assessments.
Slovakia presents a different combination of financing conditions. Although surveyed institutions report comparatively attractive lending margins, commercial property credit has experienced periods of subdued growth. This indicates that the cost of borrowing is not the only factor influencing financing activity.
Developers may postpone construction because expected investment returns are insufficient to justify the financial commitment. Banks may also concentrate on projects offering greater certainty over future income. Without distinguishing between these factors, limited lending growth cannot be interpreted as evidence that financial institutions are unwilling to support property development.
At the same time, regional banking research indicates that construction finance has maintained a relatively significant position within the Slovak property lending market. This suggests that the country’s financing environment is more complex than overall credit growth figures might indicate. The availability of lending for particular developments needs to be assessed alongside changes in demand and the types of projects being financed.
Hungary provides clearer evidence of a recovery in property financing transactions. According to the Hungarian National Bank, the amount of commercial property project lending disbursed during 2025 increased by 54% compared with the previous year. Nearly two-thirds of the financing related to construction loans, demonstrating renewed activity following a weaker period for the market.
However, the increase requires careful interpretation. Refinancing existing obligations contributed substantially to activity in several property sectors, meaning that the total outstanding volume of project lending increased by only 7% after adjusting for exchange-rate movements. The figures indicate a recovery in financing transactions, but not an equivalent expansion in new construction investment.
Hungarian banks have also maintained different approaches to individual property sectors. Office development remains an area of concern because of uncertainty surrounding future occupier demand and the possibility of higher vacancy rates. The central bank reported that some institutions tightened their requirements for office lending towards the end of 2025, with further restrictions possible during the first half of 2026.
The Hungarian experience demonstrates that banks can increase their overall property financing activity while becoming more cautious about particular developments. It also illustrates how refinancing can support lending volumes without necessarily creating additional construction opportunities.
Romania faces a different set of challenges. Its banking sector remains financially sound, but the overall scale of financial intermediation is relatively limited compared with more developed European economies. This characteristic is relevant when assessing the country’s financing environment, although it does not establish how readily individual property developers can obtain loans.
Regional lender research also places Romania among the markets where borrowing margins for commercial property are comparatively high. These differences may reflect economic conditions, project characteristics, financing currencies and the financial strength of borrowers. They cannot automatically be attributed to insufficient banking competition.
For Romanian developers, access to financing is therefore likely to depend on a combination of project quality, borrower resources and the availability of institutions prepared to finance the proposed development. Larger companies with established portfolios may be able to negotiate arrangements that are not readily available to smaller businesses, although consistent transaction-level evidence is needed to establish the extent of any difference.
One of the more significant developments across Central and Eastern Europe is the changing preference of banks regarding the types of construction projects they are prepared to support. Residential development has become the most attractive category among lenders participating in KPMG’s latest regional survey, replacing industrial and logistics property.
This change suggests that banks increasingly favour housing developments where expected sales and local demand provide a basis for assessing future repayment. Retail parks are also attracting interest, particularly compared with traditional shopping centres. Hotels and resorts remain among the more difficult development categories to finance through conventional bank lending.
The implications extend beyond the individual property sectors involved. Banks’ preferences can influence the pace of development in particular locations, especially where developers depend heavily on borrowed capital. A residential project supported by strong buyer demand may be able to proceed while an office scheme without committed occupiers remains financially uncertain.
The same principle applies to completed investment properties. A logistics facility occupied by a financially secure tenant provides an existing income stream that can support loan repayments. A development awaiting construction and future leasing presents a different financial proposition, even when its eventual market value could be substantial.
For developers, the amount of capital available is only one component of the financing decision. Banks also determine how much of a project’s value or construction expenditure they are willing to fund, what guarantees are required and when repayments must begin. These conditions can have a substantial influence on the commercial viability of an investment.
A relatively low interest margin may offer limited benefit if the developer must provide more equity than it can reasonably commit. Similarly, requirements for advance sales or signed leases can delay construction until sufficient demand has been demonstrated. The financing structure can therefore be as important as the headline borrowing cost.
These considerations are particularly relevant to smaller independent developers. A company undertaking a single residential project may have limited existing assets available as security and fewer established relationships with financing institutions. Larger property groups can often draw on completed buildings, recurring income and experience across multiple developments when negotiating with lenders.
However, the available evidence does not establish that smaller developers systematically receive less favourable financing because of banking concentration. Differences in borrowing conditions may also reflect the financial resources of individual companies, project size, construction risk and the cost to banks of arranging relatively small loans.
Determining whether smaller developers face additional disadvantages would require comparing financing arrangements for developments with similar commercial characteristics. Such an assessment would need to examine borrowing margins, equity contributions, guarantees, repayment periods and the proportion of financing applications that receive approval.
Published regional lending surveys provide valuable information about banks’ preferences and expectations, but they do not offer a comprehensive comparison of these conditions across different borrower sizes. Their coverage also varies between years, while some assessments exclude smaller residential developments.
This creates an important limitation when examining how property lending competition has evolved since 2019. Changes in the number of institutions participating in surveys cannot be used to determine whether the number of banks actively financing construction has increased or decreased. Nor does the total number of licensed banks in a country reveal how many are willing to finance particular development projects.
Banking consolidation therefore needs to be considered separately from effective competition in property finance. A market with fewer domestic institutions may still attract international lenders and specialised financing providers. Conversely, a country with numerous banks may offer developers relatively few options for particular types of construction loans.
Alternative financing could become more important as developers seek greater flexibility. Private investment funds and specialised lenders can provide capital outside conventional banking arrangements, potentially supporting projects that do not meet standard lending requirements. However, these financing structures may involve higher borrowing costs, additional security or transaction sizes that make them unsuitable for smaller developments.
The expansion of private lending consequently does not guarantee that access to development capital will improve across the entire market. Its significance will depend on which projects alternative lenders are prepared to finance and whether the resulting terms allow developments to remain commercially viable.
The broader regulatory environment also influences banks’ approach to property finance. European financial institutions have strengthened their capital positions since the global financial crisis, improving their ability to withstand economic uncertainty. These safeguards can influence how lenders assess property-related risks, although the available evidence does not establish that stronger banking requirements have systematically reduced development lending across Central and Eastern Europe.
The recovery in Hungarian project financing, improving lending sentiment in Poland and Czechia, and continued European interest in development loans demonstrate that financial institutions remain willing to expand their property exposure when suitable opportunities arise.
Nevertheless, the differences between the five markets indicate that stronger banks do not automatically produce higher development lending volumes. Economic growth, construction costs, investor confidence, occupier demand and expected investment returns continue to shape both the demand for financing and the willingness of institutions to provide it.
The next stage of Central and Eastern Europe’s property recovery is therefore likely to be influenced by the conditions attached to new lending as much as by the total amount of capital available. Developers with established financial resources and projects offering predictable income appear well positioned to benefit from stronger competition. Others may continue to face more demanding financing requirements despite improving sentiment among lenders.
For the regional property industry, the central question is increasingly becoming which developments can obtain financing on commercially sustainable terms. A recovery concentrated on established investors and lower-risk assets could support transaction activity without producing an equivalent expansion in construction opportunities.
The longer-term strength of Central and Eastern Europe’s property market will depend not only on banks’ willingness to increase lending, but also on whether financing conditions allow a sufficiently broad range of viable developments to proceed. As lending activity recovers, the relationship between access to capital, project risk and competition among financing institutions will remain a defining factor in the region’s next investment cycle.
Source: CIJ.World Research & Analysis Team
