We have detected that fraudulent individuals are misusing the "DWS" trademark and the names of DWS employees on the internet and social media. These fraudsters are operating fake websites, Facebook pages, WhatsApp groups and Mobile Apps. Please be aware that DWS does not have any Facebook Ambassador profiles or WhatsApp chats. If you receive any unexpected calls, messages, or emails claiming to be from DWS, exercise caution and do not make any payments or disclose personal information. We encourage you to report any suspicious activity to info@dws.com, including any relevant documents and the original fraudulent email. Additionally, if you believe you have been a victim of fraud, please notify your local authorities and take steps to protect yourself.

European Real Estate Debt Opportunities

2/25/2025

Cartsen Lieser

Property Market Research, Europe

IN A NUTSHELL

Financing gap and more restrictive lending from the traditional lenders is an potential opportunity for alternative lenders, in a de-risking environment with stabilising values and a recovering investment market.
Basel IV has a tightening effect on banks credit standards, already visible in lending sentiment and surveys while overall debt margins in Europe seem to follow an opposite trend.
This is most pronounced for higher leveraged debt, such as whole loans and development financing, which look increasingly attractive given elevated margins compared to senior loans.
Supply shortage, falling development activity, construction sector insolvencies and the shift toward high-quality assets support development financings in particular.
We favor residential including PBSA and co-living, logistics and selective prime offices offering attractive risk premiums.

Restrictive Bank Lending Sentiment

Opportunities for private debt as market recovers

While the overall market sentiment in Europe is recovering, recent surveys of German credit institutions with exposure to the real estate market point to stricter lending conditions from banks. Banks reported more restrictive lending behaviour compared to pre-crisis levels. Quantitative criteria, such as debt yield, LTV and DSC have tightened, while pre-sale and pre-rental quotas are being enforced more rigorously, posing challenges in the current market.

Survey participants expect the crisis to persist throughout 2025, with both the real estate market and in-house real estate loan portfolios viewed as high-risk. Follow-up financing remains a key challenge amid elevated borrowing cost. In the case of office and retail properties, 90% of survey participants see a high or very high risk, while the level is significantly lower at 40% for hotel and logistics. Eventually, this most likely leads to a financing gap, which we see as an opportunity for private debt vehicles, as market fundamentals remain supportive as well. Prime yields have stabilized, and prime capital values turned positive given low supply and strong rental growth.

European Real Estate Debt Opportunities

Click here to download the full article

More topics

Real Estate Research

Alternatives Research

This information is subject to change at any time, based upon economic, market and other considerations and should not be construed as a recommendation.

Past performance is not indicative of future returns.

Forecasts are not a reliable indicator of future performance. Forecasts are based on assumptions, estimates, opinions, and hypothetical models that may prove to be incorrect.

Investments come with risk. The value of an investment can falls as well as rise and your capital may be at risk. You might not get back the amount originally invested at any point in time.

Risk information

Private Credit/Debt risks: All investments involve risk, including possible loss of principal. Private Credit, Direct Lending investments are private and may not be appropriate or available for retail investors in the U.S. Investments in Private Credit are subject to various risks including but not limited to market risk, general economic and market conditions, economic recession risk, inflation/deflation risk, counterparty risk, prepayment and extension risk, debt securities, default risk, secured debt, second lien and subordinated loans, private investment risk, PIK interest risk, direct lending risk, interest rate risk, Illiquid portfolio investments, valuation risk, high yield debt, and reinvestment risk.

Real Estate risk: Investing in Real Estate is subject to various risks, including but not limited to the following: Adverse changes in economic conditions including changes in the financial conditions of tenants, buyer and sellers, changes in the availability of debt financing, changes in interest rates, real estate tax rates and other operating expenses; Adverse changes in law and regulation including environmental laws and regulations, zoning laws and other governmental rules and fiscal policies; Environmental claims arising in respect of real estate acquired with undisclosed or unknown environmental problems or as to which inadequate reserves have been established; changes in the relative popularity of property types and locations; risks and operating problems arising out of the presence of certain construction materials; and currency/exchange rate risks where the investments are denominated in a currency other than the investors home currency.

For EMEA, APAC, LATAM & MENA:

DWS is the brand name of DWS Group GmbH & Co. KGaA and its subsidiaries under which they do business. The DWS legal entities offering products or services are specified in the relevant documentation. DWS, through DWS Group GmbH & Co. KGaA, its affiliated companies and its officers and employees (collectively “DWS”) are communicating this document in good faith and on the following basis.

This document is for information/discussion purposes only and does not constitute an offer, recommendation, or solicitation to conclude a transaction and should not be treated as investment advice.

This document is intended to be a marketing communication, not a financial analysis. Accordingly, it may not comply with legal obligations requiring the impartiality of financial analysis or prohibiting trading prior to the publication of a financial analysis.

This document contains forward looking statements. Forward looking statements include, but are not limited to assumptions, estimates, projections, opinions, models, and hypothetical performance analysis. No representation or warranty is made by DWS as to the reasonableness or completeness of such forward looking statements. Past performance is no guarantee of future results.

The information contained in this document is obtained from sources believed to be reliable. DWS does not guarantee the accuracy, completeness, or fairness of such information. All third-party data is copyrighted by and proprietary to the provider. DWS has no obligation to update, modify or amend this document or to otherwise notify the recipient in the event that any matter stated herein, or any opinion, projection, forecast, or estimate set forth herein, changes or subsequently becomes inaccurate.

Investments are subject to various risks. Detailed information on risks is contained in the relevant offering documents.

No liability for any error or omission is accepted by DWS. Opinions and estimates may be changed without notice and involve a number of assumptions which may not prove valid.

DWS does not give taxation or legal advice.

This document may not be reproduced or circulated without DWS’s written authority.

This document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country, or other jurisdiction, including the United States, where such distribution, publication, availability, or use would be contrary to law or regulation or which would subject DWS to any registration or licensing requirement within such jurisdiction not currently met within such jurisdiction. Persons into whose possession this document may come are required to inform themselves of, and to observe, such restrictions.

Issued in the UK by DWS Investments UK Limited which is authorised and regulated by the Financial Conduct Authority (Reference number 429806).

In Hong Kong, this document is issued by DWS Investments Hong Kong Limited and the content of this document has not been reviewed by the Securities and Futures Commission.

In Singapore, this document is issued by DWS Investments Singapore Limited and the content of this document has not been reviewed by the Monetary Authority of Singapore.

In Australia, this document is issued by DWS Investments Australia Limited (ABN: 52 074 599 401) (AFSL 499640) and the content of this document has not been reviewed by the Australian Securities Investment Commission.

For investors in Bermuda: This is not an offering of securities or interests in any product. Such securities may be offered or sold in Bermuda only in compliance with the provisions of the Investment Business Act of 2003 of Bermuda which regulates the sale of securities in Bermuda. Additionally, non-Bermudian persons (including companies) may not carry on or engage in any trade or business in Bermuda unless such persons are permitted to do so under applicable Bermuda legislation.

For investors in Taiwan: This document is distributed to professional investors only and not others. Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed, and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction, or transmission of the contents, irrespective of the form, is not permitted.

104713_1.0 (02/2026)

European Real Estate Debt Opportunities

IN A NUTSHELL

Restrictive Bank Lending Sentiment

More topics

For EMEA, APAC, LATAM & MENA:

Quick Access

Topic

More DWS

Select your location

Select your role