Sentiment brightens among financiers, continues upward trend

The trend among financiers of German real estate continues upwards, extending a pattern of rising optimism lasting more than a year, the latest BF Quarterly Barometer shows.

For the fifth quarter in a row, the Stuttgart-headquartered BF.direkt has determined an improved mood among German real estate financiers. This is reflected in the quarterly barometer, which is based on a survey series index, and whose gauge now stands at 1.61 in the third quarter of 2021, thus turning positive again for the first time after -1.02 in the second quarter.

The optimism is driven, among other things, by new business, which is growing at almost two-thirds of the financiers (61.3%). The mood is also lifted by the fact that only a few market participants (12.9%; -9.7 percentage points) still assess the financing conditions as restrictive. Another positive factor is that the share of financings of below €10 million has decreased to 22.6% (-7.4 percentage points).

The renewed slight increase in the BF Quarterly Barometer needs to be viewed against the background of the massive slump in March 2020. Since then, sentiment has been slowly recovering step by step," Professor Dr. Steffen Sebastian, scientific advisor to the index, classifies the development.

Compared to the first half of the year, which was still heavily marked by the lockdown, both sentiment and market activity have risen significantly. The much-feared NPL wave has not materialised. Nevertheless, the pandemic IS having an impact, says Manuel Köppel, CFO of BF.direkt: "This is mainly reflected in a still selective approach of financiers and in a great reluctance on the part of hotel and non-food retailers."

Lending margins are 158.4 basis points, and 237 basis points for project developments. The loan-to-value on existing property financing fell to 67.1% (-0.5% points), while the loan-to-cost on project development financing fell to 71.3% (-1.8% points).