Debt opportunities on the rise for Europe’s non-listed sector

The debt component of the non-listed real estate sector has seen significant growth in the last few years according to INREV’s director of research and market information Iryna Pylypchuk.

Current market conditions might help to accelerate some that growth further, she said. This is particularly the case in the senior lending space.

“This is an opportunity to step into that financing gap that traditional lenders have left open.”

Pylypchuk said that the pressure for the European commercial real estate sector to decarbonise means there is also an opportunity for non-listed Real Estate debt funds to provide ESG debt. Banks’ more conservative view is creating opportunities for Europe’s non-traditional lenders to follow the pattern of the US.

“We’re already on that journey. If you look at the UK market versus continental Europe we have already seen acceleration and growth when it comes to non-traditional lenders and them stepping up in terms of new lending activity and even overtaking traditional lenders,” Pylypchuk said.

She added that the continental market further behind but the direction of travel is clear, the funding gap is large enough and there is stress because of market fundamentals.

“That opportunity is there, it will take quite a bit of time to service, so I think it will probably just move forward faster than it may have done otherwise.”