Cautious return of confidence in the European real estate finance market in 2025

Conducted among 143 financial institutions (banks, insurers, alternative lenders) – 25% of which are located in France – the study highlights a renewed confidence in the real estate financing market, despite a still uncertain economic and geopolitical context.

The key figures of the study:

• 78% of lenders expect their business to increase compared to 2024;
• 69% say they are concerned about the uncertain geopolitical context, identified by respondents as the main challenge for the European credit market in 2025;
• 71% do not plan to finance assets that do not meet ESG criteria (or which do not at least have a roadmap to comply with them);
• 57% offer more advantageous loan conditions for projects that meet ESG criteria.

Cautious confidence boost among European lenders

Following two consecutive studies in 2023 and 2024, CBRE has conducted a new survey of leading European real estate lenders. The results reveal a rather optimistic sentiment, with nearly 80% of lenders planning to increase their activity compared to 2024. This rising proportion should support the continued recovery of the European real estate market.

After three years marked by high volatility due to geopolitical crises – the main challenge for the credit market, cited by 69% of respondents – and by the rise in long-term rates, 2025 promises to be a year of normalization.

In addition to the uncertain geopolitical context, the market will also have to face other challenges: the persistence of weak investments (cited by 50% of respondents), the fear of a recession (42%), uncertainty regarding interest rates (36%) and the future valuation of real estate (33%).

Today, the majority of lenders are focusing their activities on refinancing operations – 56% of those surveyed in Europe and 74% in France – while waiting for a clear recovery in the investment market.

ESG criteria, a non-negotiable condition

71% of respondents say they will not finance assets that do not meet environmental, social, and governance (ESG) criteria or do not implement an ESG compliance plan to achieve them. This is the new normal: sustainability criteria are now essential for accessing financing. Without a clear commitment and a clear roadmap, lenders will not provide financing.

Preferred Asset Classes: Towards a New Normal?

The survey, however, reveals that lenders remain selective in terms of economic sectors. While sentiment is improving overall for most asset classes, residential, industrial, and hospitality are the most popular asset classes for European lenders. For French lenders, hospitality is particularly popular, ranking first in their rankings, ahead of student residential and industrial properties.

When it comes to alternative asset classes, coliving is attracting growing interest from European investors. Nearly 81% of respondents say they are willing to finance this type of asset, which ranks second among the most popular alternative assets among European lenders, after senior living facilities. Coliving even ranks first among alternative assets for French respondents.

For Abdallah Ould Brahim, Head of Investment Banking at CBRE France: "Lenders are now showing renewed confidence and a clear desire to increase business volumes. This positive mood is supporting the recovery of the European real estate market."

For Pierre-Edouard Boudot, Director of Research and Strategy at CBRE France: "We are seeing a gradual return to initiative in the mortgage market. Lenders are once again active, but with selectivity reinforced by ESG issues and sector positioning."

Illustrative image of the article via Depositphotos.com.