European Property Loan Market To Hit EUR40bn In 2014

By Editorial 11 February, 2014

There will be more than EUR40bn worth of transactions in Europe's real estate loan market in 2014, a 30 percent increase on 2013's total, according to a forecast by the Corporate Finance team of real estate services firm Cushman & Wakefield.

The figure, released as part of the team's latest research report, European Real Estate Loan Sales Market 2014, would mark a rise of EUR10bn on last year's total and indicates growing momentum and market maturity across Europe.

Cushman & Wakefield Corporate Finance recorded EUR30.3bn of closed European commercial real estate (CRE) loan and real estate-owned (REO) sales by banks, non-bank financial institutions and asset management agencies in 2013. The figure was bolstered especially by the increased activity of asset management agencies such as NAMA and SAREB and large "bad banks" such as IBRC (in special liquidation). Compared to the EUR22.5bn sold in 2012, this reflects an increase of 35 percent with the number of completed sales nearly doubling from 45 to 84.

Loans secured by CRE accounted for the majority of such sales recorded by Cushman & Wakefield Corporate Finance during 2013 (73 percent), with EUR22.1bn in completed transactions compared to EUR11.1bn in 2012. A further 18 percent of the total was attributable to REO sales, a significant increase from just 5 percent in 2012 evidencing the acceleration of the disposal process of repossessed assets by banks such as RBS and Lloyds Bank. The remaining 9 percent corresponds to transactions involving whole CMBS, residential or corporate loans.

A late surge in loan sales in November and December last year accounted for almost 38 percent of the total volume for 2013, as both vendors and purchasers attempted to meet year-end targets. Meanwhile, 2014 has started as strongly as last year ended: 10 transactions have already been completed in January, with Morgan Stanley's disposal of EUR5.6bn of European CMBS and senior loans, including the servicing platform, to Mount Street contributing to the majority of the EUR7.1bn total to date. With many banks and asset management agencies still some way off completing their deleveraging plans, Cushman & Wakefield Corporate Finance anticipates a continued high level of loan and REO sales activity over the coming year.

As activity has spread across Europe and the average size of sales has decreased from EUR500m in 2012 to EUR360m in 2013, there has been a notable increase in the range of potential buyers with several smaller local investors paying premium prices to break into the market.

Tags: Finance | Investment | Real-estate Investment | Real-estate | Services | Expats | Europe |


News Archive