The European real estate debt market will continue to tighten in the coming year, as lenders adopt a cautious outlook and become more selective in who they lend to. According to CB Richard Ellis (CBRE), credit will become more difficult to attain.
In the long-term, regulatory changes, such as the implementation of Basel III, will see lenders increase the amount of capital they are required to retain. Over the short-term, debt supply will be restricted by the withdrawal of some lenders from the market, CBRE added.
Commenting, Natale Giostra, head of UK & EMEA Debt Advisory at CBRE Real Estate Finance, said: "The withdrawal of lenders from the market either from international activity or real estate all together continues to take its toll."
The property consultancy added that it is unlikely that new lending activity will re-start. With interest rates also expected to increase, CBRE expects to see European lenders become even more selective in 2011, with terms becoming more restrictive.