Credit: Adobe StockMarket Radar Europe: European CRE lending rebounds as financing deficit narrows
The latest developments in the European real estate market this week
October 24, 2025Real Estate
Written by Helen Richards
Key Takeaways:
According to a study by AEW, the difficulty in refinancing is starting to ease across much of the continent, and the region’s financing deficit has narrowed by 18%, falling to EUR 74 billion for the 2026-2028 period. This compares favourably to the EUR 90 million estimated for the previous 2024-2026 period. However, the AEW study highlights that France remains an exception, where refinancing difficulties persist.
The UK market is experiencing a particular surge, with new lending having jumped by a third year-on-year during the first half of 2025, reaching a total of GBP 22.3 billion, according to the latest bi-annual report from Bayes Business School.
The banking sector's renewed enthusiasm is supported by the substantial progress in reducing defaulted loan books, achieving a 10-20% decline through refinancing 70% of loans and increasing loan syndication.
Competition among lenders is fierce and banks are increasingly bullish. Loans are being offered at highly competitive rates, with lenders showing particular enthusiasm for office and logistics assets, followed by student housing and residential properties.
Development financing has emerged as a key area of growth, accounting for 22% of new lending and 19% of total outstanding CRE debt.
The market activity is evidenced by several recent significant transactions, including a major deal by Great Portland Estates (GPE) who signed a new GBP 525 million ESG-linked unsecured revolving credit facility with a group of four existing relationship banks, including NatWest, Santander, Bank of China, and Lloyds.
Separately, in continental Europe, the Dutch manager Redevco completed its second loan transaction, providing EUR 67 million in financing the acquisition and development of three logistics assets across Frankfurt and Karlsruhe in Germany.
Back in the UK, a GBP 348 million senior loan for the refinancing of The Park Tower Hotel in Knightsbridge was extended by King Street Capital Management, Cohort Capital, and funds managed by Apollo.
The investment aligns with a broader government pledge to boost science and technology, particularly in the corridor between Oxford and Cambridge universities.
This enthusiasm is echoed by the logistics real estate company Prologis, which has promised a GBP 3.9 billion investment aimed at boosting life science manufacturing and creating jobs across the UK.
Life sciences is among the alternative sectors which are increasingly gaining investor interest, as the search for a stable income stream becomes an intrinsic part of real estate’s redefined core strategy.
Look out for a new edition of the GRI Institute's Market Radar Europe next week!
Key Takeaways:
- Europe’s CRE financing deficit has narrowed by 18% to EUR 74 billion for the 2026-2028 period, coinciding with a renewed surge in lending.
- Competition among lenders is fierce, with banks showing renewed enthusiasm by offering highly competitive rates and prioritising office, logistics, student housing, and residential assets.
- The UK life sciences sector received a major boost, including a GBP 6 billion investment by The Crown Estate and a GBP 3.9 billion commitment from Prologis.
Lending Surge & Narrowing Financing Deficit
The European commercial real estate (CRE) market is enjoying a narrowing financing gap and a renewed surge in lending.According to a study by AEW, the difficulty in refinancing is starting to ease across much of the continent, and the region’s financing deficit has narrowed by 18%, falling to EUR 74 billion for the 2026-2028 period. This compares favourably to the EUR 90 million estimated for the previous 2024-2026 period. However, the AEW study highlights that France remains an exception, where refinancing difficulties persist.
The UK market is experiencing a particular surge, with new lending having jumped by a third year-on-year during the first half of 2025, reaching a total of GBP 22.3 billion, according to the latest bi-annual report from Bayes Business School.
The banking sector's renewed enthusiasm is supported by the substantial progress in reducing defaulted loan books, achieving a 10-20% decline through refinancing 70% of loans and increasing loan syndication.
Competition among lenders is fierce and banks are increasingly bullish. Loans are being offered at highly competitive rates, with lenders showing particular enthusiasm for office and logistics assets, followed by student housing and residential properties.
Development financing has emerged as a key area of growth, accounting for 22% of new lending and 19% of total outstanding CRE debt.
The market activity is evidenced by several recent significant transactions, including a major deal by Great Portland Estates (GPE) who signed a new GBP 525 million ESG-linked unsecured revolving credit facility with a group of four existing relationship banks, including NatWest, Santander, Bank of China, and Lloyds.
Separately, in continental Europe, the Dutch manager Redevco completed its second loan transaction, providing EUR 67 million in financing the acquisition and development of three logistics assets across Frankfurt and Karlsruhe in Germany.
Back in the UK, a GBP 348 million senior loan for the refinancing of The Park Tower Hotel in Knightsbridge was extended by King Street Capital Management, Cohort Capital, and funds managed by Apollo.
UK Life Sciences
In other news, the UK life sciences sector received a GBP 6 billion boost this week as The Crown Estate purchased an Oxfordshire site, estimated to feature as much as 4.5 million square feet of offices, labs, and advanced manufacturing space, as well as up to 400 homes.The investment aligns with a broader government pledge to boost science and technology, particularly in the corridor between Oxford and Cambridge universities.
This enthusiasm is echoed by the logistics real estate company Prologis, which has promised a GBP 3.9 billion investment aimed at boosting life science manufacturing and creating jobs across the UK.
Life sciences is among the alternative sectors which are increasingly gaining investor interest, as the search for a stable income stream becomes an intrinsic part of real estate’s redefined core strategy.
Look out for a new edition of the GRI Institute's Market Radar Europe next week!