Debt door open for unlisted lenders as demand grows

Non-traditional and non-listed lenders have experienced increasing demand for real estate debt over the past two years or so, according Iryna Pylypchuk, Director of Research and Market Information, INREV.

European unlisted real estate debt strategies accounted for 18%of capital raised in 2021. “That’s really quite powerful,” said Pylypchuk.

“When it comes to investment intentions, 35 % of investors when weighted by assets are looking to increase their allocations to non-listed real estate debt in the next two years,” she added.

“That’s really reflected in what we see in our debt vehicle universe which has doubled both in terms of the number of funds, which now stands at 95, and in terms of target equity which is close to €60 billion. I think there is more of that to come in the near future,” she said.

In terms of debt, the European market is still at an early stage compared to the US where more than 50% of outstanding debt sits with non-traditional lenders.

“I think the regulatory changes and finalisation of Basel 3 opens a funding gap opportunity for non-traditional lenders to step in and cater for the market,” she said. “In terms of evolution it gives borrowers more options to choose from and it’s an opportunity for new non-traditional lenders to come in and enhance the market.”

Click on the video to watch the full interview or listen to the podcast below.