FinLoop Quarterly Debt Liquidity Barometer Q1 2023

by Nicole Lux

21 Mar 2023

FinLoop Quarterly Debt Liquidity Barometer Q1 2023

Key findings Q1 2023

  • 10-yr government bond yields have declined by another 20 - 30bps since December 2022, however further increases in ECB base interest rates have been announced, keeping economic optimism down.
  • GDP growth forecasts for 2023 have improved slightly from December 2022 indicating 0.2 to 0.4% growth for the Eurozone countries, the UK no longer forecasts negative growth.
  • Property yields continue to soften across all sectors and geographic locations, however it is believed that the bottom has not been reached yet.
  • FinLoop marketplace recorded a recovery of transaction activity in Q4 2022 with a nearly 50% increase from Q3 2022. In Q1 2023 the year started with continued deal flow for logistics and residential assets.
  • Despite some relieve on energy prices, the overall high cost basis in Europe keeps having an impact on the real estate sector. Especially development projects are difficult to fund, leading to delays and cancellation of projects.
  • Real estate investors as well as private individuals are hit with increased costs for ESG improvements on their properties to support the EU's carbon zero, energy efficiency and environmental targets.
  • 3-months Euribor has continued to increase between January and March, not providing any relief for borrowers. The yield curve remains inverted, making long-term borrower slightly cheaper.
  • Average all-in loan interest rates now start from 4\% upwards for stable prime assets in key cities locations. More opportunistic or transitioning assets, not in prime location will be priced 100 - 150bps wider.
  • Lenders have also reduced their day-1 LTV loan amounts and for some assets, this might be as low as 35 – 40% leverage.

Download file:
FinLoop – Q1 2023