Risk of CRE debt distress greater in the EZ than the UK

A stabilisation in capital values and decline in interest rates have sparked optimism that we may be past the worst of the real estate debt refinancing challenge. That indeed looks to be the case in the UK. However, euro-zone banks are still pulling back on CRE lending and expect to tighten their credit standards and loan terms further in the coming months. And while a wave of distressed selling looks unlikely, this will pose a problem in the bloc as banks dominate the lending market and alternative lenders aren’t big enough players to fully plug looming debt refinancing shortfalls.