German financiers more optimistic on new business - barometer

Banks' willingness to finance German real estate has improved significantly, according to the latest BF.Quartalsbarometer carried out by market researcher BulwienGesa.

Compared to the previous quarter, the barometer value climbed from 0.52 to 2.05. (The higher the value, the greater the propensity to lend.)

In particular, new business is being viewed positively: Half of the financers surveyed are expecting an increase, while at the same time "there is a tendency toward taking higher risks and backing niche properties as well as residential projects", according to BF.direkt CEO Francesco Fedele.

Parking house assets (+1.2 points), hotels (+ 0.8 points) and social properties (+0.6 points) are cited more frequently, as are existing micro-apartments (+1.2 points) and micro-apartment projects (+2.5 points).

The current margins on financing of existing buildings in all segments range from 49 to 550 basis points. The average margin is 140 basis points (Q3/2016: 132 basis points). For project financing, the range is 95 to 600 basis points, with the average being 194 basis points, slightly less than the previous quarter (200 basis points).

According to Professor Steffen Sebastian, who acts as scientific adviser for the quarterly barometer, the recovery in investing sentiment is a function of several macro-economic factors – not least the non-realisation of many of the fears in the wake of the Brexit vote, plus the indication from the European Central Bank that no change in its easy money policy is to be expected before March 2017. This helps financiers to plan their immediate futures.

Less positively, Prof. Sebastian cites the pending new measures by the government designed to dampen any tendencies for housing bubbles to develop. "These are likely to have a major effect on the property financing landscape", he said.