Empira Group
Empira Group, Zug, Switzerland
A new study from the Switzerland-based Empira Group puts the refinancing gap in the European commercial property market at €86 billion as of Q3 2024—a shortfall representing 13% of all real estate loans maturing between 2025 and 2027. The firm’s findings point to a “maturity wall” fast approaching, with €130 billion of CRE loans set to expire in 2025 and another €185 billion in 2026.
The office sector is at the centre of the problem, with loans worth €50 billion and €65 billion due in the next two years. Residential and logistics assets are also heavily exposed, with double-digit billion euro maturities annually. Most of the debt was issued during a period of historically low interest rates and now requires refinancing at sharply higher levels. According to the report, average rates for loans with 1–5-year fixed terms have more than doubled over the past decade, rising from 1.90% in 2014 to over 4.01% in 2024.
Empira points to mounting constraints within the banking system. Under Basel III and IV, banks are facing tougher capital requirements, particularly for CRE loans. The additional equity backing needed for such loans is expected to rise by around 10%, potentially more depending on asset type and duration. This has led to reduced bank appetite for refinancing, particularly in sub-markets perceived as higher risk or where valuations are uncertain.
Private debt now moving centre stage among lenders
In this context, private debt is moving from a marginal supplement to a central component of CRE capital stacks. “Although the interest rate situation has eased somewhat, traditional loan structures can no longer fully cover the needs in many sub-markets,” said Lahcen Knapp, founder and chairman of Empira Group. He expects private debt strategies to play a pivotal role in addressing the shortfall.
Empira identifies the mid-market segment—loans between €30 million and €75 million—as the zone of greatest opportunity for non-bank lenders. Tailored financing structures, unavailable from traditional sources, are gaining traction, especially among borrowers unable or unwilling to meet stricter bank criteria.
The growth of the private debt market is already underway. The global volume of capital raised for real estate lending by non-bank institutions has risen sharply, from around €70 billion in 2014 to €210 billion by 2021. In Germany, the alternative real estate financing market has expanded by 62% over the past decade. Investment funds dominate, accounting for nearly 90% of private debt activity. According to Knapp, the use of fund-level borrowing—so-called back leverage—is improving capital allocation efficiency and allowing funds to extend credit without directly raising fresh equity.
The implications are clear. With traditional lenders retreating from key segments, private debt is assuming a structurally larger role in European property finance. International investors seeking exposure to CRE will increasingly find themselves working alongside or through non-bank structures. The next 24 months will test who can adapt—and who cannot refinance at all.