European Real Estate Lending in 2025: Confidence Returns, but Caution Remains
As we move through 2025, the European real estate lending landscape is showing signs of renewed confidence. According to CBRE’s latest European Lender Intentions Survey 2025, lenders across the continent—including those active in Belgium—are cautiously optimistic about the year ahead. After a period of market recalibration, financing conditions are beginning to stabilise, and lending appetite is gradually returning.
A Market in Recovery
The survey reveals that most lenders believe the worst of the market correction is behind us. While 2023 and early 2024 were marked by rising interest rates, valuation uncertainty, and limited transaction activity, 2025 is shaping up to be a year of cautious re-engagement. Many lenders now expect deal volumes to increase, driven by improved clarity on pricing and a narrowing gap between buyer and seller expectations.
Lending Appetite Is Sector-Specific
Although overall sentiment is improving, lenders are not approaching all sectors equally. The survey shows a clear preference for sectors with strong fundamentals and resilient income streams. Residential (particularly multifamily and affordable housing), logistics, and prime offices are among the most favoured asset classes. In contrast, retail and secondary office assets continue to face scrutiny, with lenders applying more conservative underwriting standards.
Belgium in the European Context
In Belgium, these trends are playing out in much the same way. Lenders remain selective, favouring assets in Brussels and other core urban markets with strong tenant demand and ESG credentials. The emphasis on sustainability is particularly notable, with most lenders requiring clear environmental performance metrics as part of their lending criteria. This aligns with broader European regulatory pressures and investor expectations.
Loan Terms and Risk Appetite
Loan-to-value (LTV) ratios remain conservative, typically ranging between 50% and 60% for most asset classes. Margins have stabilised but remain elevated compared to pre-2020 levels, reflecting the ongoing risk premium in the market. However, the survey notes that some lenders are willing to stretch terms for high-quality sponsors or assets with strong ESG profiles.
Outlook for the Second Half of 2025
Looking ahead, most respondents expect lending activity to pick up in the second half of the year. This optimism is underpinned by expectations of further interest rate cuts by the European Central Bank and a more active investment market. As liquidity returns, competition among lenders is likely to increase, particularly for core assets in gateway cities.
Conclusion: A More Disciplined Market
The 2025 lending environment is defined by discipline and selectivity. While confidence is returning, lenders are applying lessons learned from recent years to ensure more resilient and sustainable financing strategies. For borrowers in Belgium and across Europe, this means opportunities are growing—but only for those who can meet the market’s higher standards.
