BF.direkt
The BF.Quartalsbarometer Q2 2025 (source: BF.direkt)
Sentiment among German real estate financiers has improved marginally in the second quarter of 2025, offering a faint signal that the sector may be inching away from the deep freeze of recent quarters. The BF.Quartalsbarometer, a key sentiment index published quarterly by BF.direkt and compiled by market researchers bulwiengesa, rose from -10.94 to -9.58 points—its highest reading since mid-2022, but still deep in negative territory.
This modest recovery reflects a stabilisation in perceived risk rather than a return of confidence. As Prof. Dr. Steffen Sebastian, Chair of Real Estate Finance at IREBS and scientific advisor to the index, noted: “The formation of the new government may have helped improve sentiment, even if the coalition agreement offers little cheer for the property industry. The BaFin’s recent reduction of the systemic risk buffer for residential real estate is also a factor, but the underlying view of commercial property remains clearly cautious.”
New government, new mood?
The BF.Quartalsbarometer, which surveys 110 credit decision-makers across banks and alternative lenders, has traced the sector’s sharp mood swings over the past decade—from +8.11 in early 2015 to the all-time low of -20.22 in Q3 2023. The current reading remains negative, indicating continued lender restraint, though fewer respondents report worsening conditions. Only 36.8% of participants now describe financing terms as more restrictive—down 8.2 percentage points from the previous quarter. A growing share (52.6%) say conditions are unchanged, and 10.5% report more progressive lending, albeit down slightly.
The share of respondents seeing new business as rising or stable has climbed to 50%, up from just 32.5% at the start of the year. This reflects a tentative uptick in deal flow, though it remains far below pre-2022 levels. “Even though new business is picking up, it is still at a very low level,” commented Fabio Carrozza, Managing Director at BF.real estate finance GmbH. “The main focus for many institutions remains the management of non-performing loans. Volumes are still high, and stricter regulation is keeping the brakes on new lending.”
Selective thaw in lending appetite
If banks are still wary, they are also becoming more selective. The survey shows rising appetite for smaller and niche asset classes, with hotels, social real estate and student housing all gaining ground. The proportion of lenders financing hotel assets rose from 37.0% to 52.6% year-on-year. Social properties saw an even steeper increase—from 17.4% to 31.6%. Micro-apartments and student accommodation now feature in 63.2% of respondents’ portfolios, up from 50%.
Perhaps most notably, there is renewed willingness to finance residential project developments, especially for developers and distributors. The share of financiers active in this area has jumped from 45.7% to 60.5% over the past twelve months—a sign that at least one segment of the market may be regaining viability in lenders’ eyes.
Elsewhere, the picture is static. Margins nudged up by just one basis point both in standing assets (224 to 225 bps) and in development (331 to 332 bps). Loan-to-values on existing stock rose slightly from 61% to 62%, while loan-to-cost ratios for developments climbed from 67% to 70%. Taken together, these data suggest stabilisation rather than relaxation: lenders are probing cautiously at the edges, but core credit standards remain intact.
The implications for the broader real estate market are twofold. Lending channels are not frozen—but they are narrow and selectively applied. Sponsors with exposure to underperforming commercial assets will find little sympathy. Developers with smaller, more targeted projects—particularly in residential, hospitality or social sectors—may find a crack of daylight. But for most, the financing climate remains unforgiving.