The net debt funding gap in Europe for the commercial property market has fallen by 42 per cent in the last six months, according to a new DTZ report.
The report has suggested that the debt gap has fallen to $50 billion (£32.1 billion), primarily led by a boost in non-bank lending. This is good news considering that Europe has been a major issue for investors in recent years, with the eurozone crisis and a gross debt funding gap of $163 billion (£104.5 billion). This is very large when you compare the gap in Asia Pacific ($22 billion), which is even set to fall by a net of $5 billion (£3.2 billion), according to DTZ predictions.
Lending capacity had even seen a surplus in large markets such as the UK, Germany and France. This is putting way less pressure on markets in Europe to refinance, especially when looking at the sharp declines witnessed in Spain and Italy.
DTZ head of strategy research Nigel Almond said: “In response to the crisis in Europe’s CRE debt markets, we continue to see growing activity and interest from non-bank sources. In core European markets including the UK, France, Sweden and Germany we see a surplus funding gap emerging over the next two years as new lending capacity more than covers the gross gap. In Spain, we see more limited new lending capacity leaving a significant $17 billion (£10.9 billion) net funding gap. We also see smaller net gaps in Ireland, Italy and the Netherlands.”
The report further forecasted that in the 2013-15 period, insurers and funds will be providing $181 billion (£116.1 billion) of new lending in Europe, meaning that their market share will rise from two per cent to seven per cent by two years' time.
Non-bank lending is driving these figures, and the UK is set to raise it's share of this from seven per cent to 15 per cent.