The department for corporate financing in EMEA region of Cushman & Wakefield company analyzed credit transactions and activity of 186 lenders on the European market who grant soft loans, including those with an extended date of redemption and for the total amount of the price, and mezzanine financing. The results of a conducted analysis point out a rise by 123 per cent in loans granted for new investments, including developer ones, and only by 10 per cent in refinancing transactions.
The particularly significant growth concerning loans granted for real estates was mainly recorded in the first half of 2014. In comparison with a similar period last year, it totaled as much as 63 per cent, while in the second half-year the volume of conducted credit transactions amounted to only 44 per cent year-on-year, which resulted from return of economic insecurity in Europe and thus tensions on the political scene.
The credit activity in 2014 increased in all the most important European debt markets, especially in Spain where the volume of granted loans – in comparison to 2013 – increased more than four times. It demonstrates a rise in interest of investors concerning commercial real estate market, on which the estimated value of investment transactions increased in 2014 by ca. 170 per cent calculating year-on-year.
It is worth mentioning that credit collateral on several assets or developed portfolios constituted 57 per cent of all analyzed transactions due to their value last year – it indicates a growth in comparison with 39 per cent last year. Moreover, the value of credits granted for big property portfolios increased substantially – this trend will also maintain this year.
Only the minority (45 per cent) of all credits granted in 2014 fell to Great Britain, whereas 41 per cent of analyzed transactions were recorded in other countries of Western Europe. In comparison to 2013, the countries of Southern Europe, that is Spain, Italy and Greece, double increased the share in credit market and recorded a growth by 80 per cent in credit volumes.
The credits granted for new investments constituted 38 per cent of all credit transactions in 2014, whereas the activity in the area of refinancing amounted to 36 per cent. It demonstrates a clear reversal of this trend in comparison to 2013.
Furthermore, the highest margins from soft loans decreased in all European countries last year and LTV rates began to stabilize.
The increase in volume as well as number of transactions in Europe in 2014 results from a growing interest in purchasing assets for a credit. It is a noticeable change on the debt financing market concerning properties in Europe in comparison with the period of a crisis. LTV rates for credits on the best assets are stabilized now and we do not envisage greater changes in this area in 2015. However, the margins will be forming properly to the more and more strong competition on the market, especially in countries like Spain and Italy. Some lenders may be prone to resign from a prime segment in search for higher profits and take greater risk – comments Frank Nickel, Executive President in department for corporate financing in Cushman & Wakefield company in EMEA region.