Volatile interest rates biggest worry but don’t forget ESG

The biggest challenge for short-term borrowers is the volatility in the interest rates that are currently being experienced, says CBRE Investment Management Head of Treasury & Debt Financing, EMEA Duco Mook.

Speaking during the recent EXPO Real property show, Mook told Real Asset Insight that the market is still discovering that valuations will most likely need to drop.

“Borrowers and buyers need to meet each other and, after all, if central banks stop hiking their interest rates it will create a stable investment environment which in the end will make it easier to adjust their underwriting.”

Longer term, the challenges are “the main trends”, Mook said.

“It’s about defining your strategy, it’s about ESG. It’s clearly here to stay. If your strategy is not ambitious enough you will be challenged by the market.”

Mook also said that it is important for borrowers to maintain a relationship with their “house bank”.

“They should be here also during these volatile times. These difficulties in the capital markets mean lenders might be challenging increased spreads in the debt capital markets. Ultimately, they need to service your clients and they need to be there in these challenging times.”