Eastern Europe Offers Most Favourable Debt Terms In Europe

Figure 1: Composite comparison of conditions for lenders and borrowers

London, 4th September 2017 – The Eastern European markets of Budapest, Bucharest and Warsaw, in addition to Milan and Oslo, offer the most amenable conditions for both lenders and borrowers, according to the latest research from global real estate advisor, CBRE.

CBRE has developed an analysis to determine lender and borrower friendliness in 20 markets across Europe. In addition to Budapest and Bucharest, the capital cities of Western Europe, including Dublin, Lisbon and London, were considered the most favourable locations for the lending community but scored less highly for borrowers with London deemed the least friendly location in Europe in which to borrow.

Based purely on pricing, the CBRE analysis therefore shows that lenders would be wise to consider less core markets for more attractive returns, although this does not account for other qualities including scale, liquidity and regulatory conditions that need to be considered.

Amenable borrowing locations on the other hand were spread across Europe with Berlin, Madrid and Amsterdam in Western Europe, Helsinki and Stockholm in the Nordics and Bratislava, Prague and Budapest in Eastern Europe proving the most amenable locations for borrowers.

Whilst there are five locations that are friendly to both lenders and borrowers, there are a further five that are considered unfavourable for both parties. These included the Western European markets of Brussels, Copenhagen, Vienna, Paris and Zurich.

For each of the 20 markets, the analysis looked at underlying market strength (determined by projected returns) against specific metrics representing the favourability of debt terms. For lenders, this included the property yield minus the total cost of debt, and debt yield, and for borrowers it considered the difference between the property yield and the total cost of debt as a proportion of the property yield.

Marco Rampin, Head of Debt and Structured Finance, Continental Europe, CBRE comments: “Our analysis of borrowing terms in 20 European countries shows that lenders willing to move beyond core markets will be rewarded with higher returns, as indeed they should be, given the lower liquidity and lack of maturity in many peripheral locations. Whilst larger, more established markets may seem less appealing, lower returns may be compensated for by scale and perceived stability. Few borrowers or lenders will have a presence across all 20 geographies, with many showing some bias towards certain locations. It is therefore more important than ever for both parties to seek professional advice when navigating the complexities of the European debt markets.”

A link to the map can be found here

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com

CBRE U.C., (CBRE Ireland) registered in Ireland, no. 316570. PSRA Licence No. 001528 is the country’s largest commercial real estate services company with offices in Dublin and Cork. Currently employing over 135 employees, we work with occupiers, investors and developers of office, industrial and logistic, retail, hotel and healthcare property, providing strategic advice and execution for property sales and leasing; tenant representation, corporate services; property and project management; appraisal and valuation; development services; investment management and debt advisory; business rates and compulsory purchase and research and consulting. Please visit our website at www.cbre.ie