Residential continues to drive European debt market

Residential real estate continues to dominate the European debt financing market despite recent gains in the office and retail sectors, a new report has found.

Examining Q1 2022 trends, fintech company FinLoop found that over 48% of the €1.4bn (£1.1bn) lending requests and agreements submitted via the platform over the first three months of 2022 were for residential properties and projects, including student and senior living accommodation.

However, in spite of a significantly lower number of loan applications compared to residential, the monetary value of requests submitted for office and retail assets via FinLoop, saw an increase in Q1 compared to the previous quarter. Retail rose by 14.3 percentage points to 18.9% of the total volume recorded, while office assets reached 21.7% in Q1, compared to 14.5% in Q4.

The levels of demand confirm a growing optimism across Europe that the worst of the pandemic is now behind us, said FinLoop’s chief executive, Dr Thomas Schneider. Based on the ESG criteria that lenders on the platform are requiring borrowers to meet, it is also clear that the real estate industry is responding to the demand, and the expectation of consumers that new-build assets will meet the highest sustainability standards, he said.