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Not all commercial property assets are re-financeable
There was little triumphalism in the recent online press roundtable organised by RUECKERCONSULT, but the mood was measurably less gloomy than it might have been six months ago. The discussion, hosted with senior representatives from BF.direkt, CR Investment Management, Hamburg Commercial Bank and HIH Invest, took a sober look at the state of real estate financing in Germany as mid-year 2025 approaches. While nobody was suggesting that conditions have normalised, there was consensus that a cautious stabilisation is under way—albeit limited to a few areas of the market.
Residential property continues to be the most financeable asset class, largely by default. Demand remains structurally high, and the chronic undersupply is well understood. Prices are beginning to edge upwards again, and lenders are gradually re-engaging—but only on the basis of hard fundamentals. As Peter Axmann of Hamburg Commercial Bank noted, residential is still top of the list for most bank clients, with logistics rents proving resilient but office and hotel assets lagging well behind. For shopping centres, he argued, prices may now be low enough to rekindle interest.
It was clear, though, that risk premiums and uncertainty continue to cloud decision-making, particularly for forward deals or any asset with a financing requirement beyond the core. Loan extensions are still being granted, but only where stable cash flow can be demonstrated. Where this is not the case, lenders are drawing the line. "Without a really good, viable concept, there will be neither financing nor an extension," said Francesco Fedele of BF.direkt.
Real estate knowledge is the differentiator
This point was echoed in various forms by the other participants. A property can still be refinanced—but not on the strength of location alone. Active asset management, realistic repositioning strategies, and a coherent rental story are now prerequisites. Fedele made the point that while many assets are salvageable, not all are, and that traditional assumptions about refinancing eligibility no longer apply. Interest rate exposure, higher leverage, and lingering valuation issues from the boom years are complicating matters further.
Torsten Hollstein of CR Investment Management pointed to a general improvement in sentiment, despite the ongoing stream of bad news. He noted that some international capital was returning, with Germany once again ranking high on investor shortlists—but added that investors have become markedly more selective. That selectiveness is visible in lending behaviour too: well-leased, ESG-compliant assets in prime locations are seeing activity, while the rest remain largely stuck. And, on the financing front, where traditional bank financing remains off the table, credit funds and whole loan structures are increasingly stepping in to bridge the gap.
For Alexander Eggert of HIH Invest, the picture is more operational. With a loan portfolio of €6 billion and regular renewal volumes of up to €600 million per year, Eggert reported no particular difficulties in rolling over existing financings. In the core space, he said, financing conditions have already absorbed most of the interest rate shock. The legacy issues, though, still need working through.
For investors and asset managers, the message was clear. This is not a dysfunctional market—but it is a market with rules that have changed. Agility, expertise and capital discipline now carry more weight than top-line yield projections. Financing is available—but not for everyone, and certainly not for everything.