Tuesday, 22 July 2025
Lending activity is expected to grow significantly this year among companies using debt to finance their real estate portfolios, according to a Europe-wide survey conducted by CBRE, a global provider of commercial real estate services.
The survey found that 40% of respondents observed an improvement in market sentiment compared to the previous year across all commercial real estate sectors. Nearly 80% of companies plan to expand their borrowing activities. The primary reason cited is refinancing existing loans (56%), followed by funding for new development projects (21%) and acquisitions (15%). The share of companies pursuing financing for these purposes has increased by nine percentage points year-on-year.
Non-bank lenders—including debt funds, insurance companies, and investment banks—are playing a larger role in financing and are generally more optimistic about credit growth than traditional banks.
Rental housing remains the leading asset class for loan financing in Europe this year, accounting for 48% of activity. Industrial and logistics properties, which shared the top position with residential assets last year, have moved to second place, while hotels have risen to third place with a 14% share.
“Similar to last year, the survey shows that over 80% of companies remain open to investing in alternative assets,” said Chris Gow, Head of Debt and Structured Finance for CBRE Europe. “This segment is currently led by various residential sub-sectors, including senior housing and co-living projects. Storage units and mini-warehouses have newly emerged among the top investment areas.”
Geopolitical uncertainty is seen as the main risk facing the European credit market, with nearly 70% of respondents expressing concerns—an increase from 37% a year earlier. Despite this, many companies plan to increase their lending activity, which could enhance liquidity and support higher loan-to-value (LTV) ratios.
From a sector perspective, interest remains strong in residential rental and industrial and logistics properties in Western Europe. There is also renewed interest in retail real estate and continued focus on data centers.
Jakub Štěpán, Head of Valuation at CBRE for the Czech Republic and Central and Eastern Europe, noted differences in the region’s market trends. “In Central Europe, including the Czech Republic, we have not yet seen widespread construction of data centers or storage units, although activity in these sectors is increasing. Debt financing in our region remains focused on traditional property types, such as shopping centers, retail parks, premium offices, and, increasingly, hotels. Following the recent sale of the Hilton Prague hotel, other significant transactions are underway.”
Across Europe, most lenders are willing to provide loans with LTV ratios of 50-60%, with only minor differences between sectors. Rental housing projects see slightly higher LTVs, ranging from 52.5% to 65%. Data centers also exhibit a broader LTV range of 50-65%, with a median slightly above 50%.
Overall, median LTVs remained stable compared to last year, fluctuating by no more than one to two percentage points. European banks and non-bank institutions reported similar figures, except in logistics and data centers. In logistics, banks reported a median LTV of 55%, compared to 60% for non-bank lenders. For data centers, banks reported a median of 60%, while non-bank lenders reported 55%.
Sustainability has become a key element in lending strategies. More than 70% of respondents indicated they would avoid financing assets lacking sustainability features or plans to achieve them. Additionally, 57% of lenders confirmed they offer improved terms or margin discounts for properties that meet higher environmental standards, Gow said.
The CBRE Lender Intentions Survey was conducted in March and April 2025, involving 143 respondents representing established companies across Europe.
