Investment on Europe’s property is down, says the Wall Street Journal. Not exactly breaking news, just more of what we now call the same-old same-old. But the article makes good points, taken from credible sources.
As lenders try to mitigate risk, only lending for absolutely prime properties – well-let assets in good locations offering secure incomes – which are scarce, they face competition from rivals but, unlike in the boom times, are unwilling to compete on margins, preferring to lose deals instead. “Debt is still available, although it is more expensive and only offered on certain assets,” said Michael Rhydderch, a partner at real estate brokers Cushman & Wakefield.
European banks usually require some 300 basis points above the European interbank offered rate, while U.K. banks want 225 basis points to 250 basis points, indicating that European property is viewed as more risky.