What 100 Conversations at EXPO REAL Revealed About the CRE Finance Market

SitusAMC European executives joined more than 40,000 professionals from 70 countries in Munich at EXPO REAL 2025, the international trade fair for property and investment, on October 5-7.  The team's discussions with more than 100 investors and lenders found positive sentiment and cautious optimism as deal flow resumes and fundamentals remain reasonably sound.  

“Activity is picking up as people look forward to the next cycle,” said Jonathan Kendrick, Senior Director, Valuation Management. “Though the market is contending with geopolitical volatility and macroeconomic noise, there’s more certainty now than in March, when lenders and investors were digesting U.S. tariff policy shifts.” 

Hein Olivier, Director, Primary Servicing, agreed. “Both equity and sponsors are coming back to the market,” he said. “At the moment there’s still a lack of significant transaction volume, but the expectation is that the fourth quarter is on a positive trajectory. Overall, people are feeling more comfortable and seeing opportunity in CRE.” 

Recent surveys confirm this: A CREFC Europe member poll found the outlook for CRE had become more upbeat in the second quarter of the year, with 51% of respondents saying conditions had improved, up from 33% in the first quarter. The sentiment score for deal volume also rebounded.  

“We’re seeing an uptick in refinancing as lenders and borrowers have found ways to restructure transactions and rebase values," Olivier added. “Lenders are more realistic in their expectations of margins.” 

Meanwhile, alternative lenders are playing a more significant role as traditional banks have scaled back. With plenty of capital chasing deals, the market is seeing more pricing competition and covenant-lite term sheets, with loan-to-value ratios rising. Some large lenders are considering smaller deals amid intense competition for loans over €100 million, with Apollo Global Management and Blackstone announcing mid-market strategies, according to Real Estate Capital Europe.  

Alternative lenders are emphasising private debt in particular, said Dan Kitchen, Senior Vice President, Valuation Management. Some 27% of CRE allocations were geared toward debt in the first half of 2025, up six percentage points from the same period two years earlier, according to a Pere Credit report. Separately, about a quarter of institutional investors and 18% of wealth managers want to increase their real estate debt exposure in the next 12 to 18 months, according to a June survey by Schroders, the London-based investment management firm. Some 45% of respondents overall said the sector is best place for risk-adjusted yield. 

In the near-term, capital appears to be flowing more to mainland Europe than the United Kingdom. "Market participants are taking a wait-and-see approach ahead of the UK budget in November,” Kitchen said, with both tax increases and spending cuts on the table, amid sluggish growth and high government borrowing costs.  

As for asset-type demand, the talk at EXPO REAL focused on industrial, data centers and hospitality, said Philipp Stief, Assistant Vice President, Primary Servicing. “Residential is viewed as offering strong potential in Spain, while the purpose-built student accommodation segment is in high demand in the UK,” he noted.  

Three-quarters of investors polled by Cushman & Wakefield identified student housing as a key investment target on one- to three-year horizon. Demand is driven by population growth, foreign student demand, a dearth of supply and a somewhat lighter regulatory backdrop, the Cushman report noted.  

Conference attendees also discussed the opportunity in AI, particularly in terms of how it can improve processes. 

SitusAMC is a leading provider of comprehensive commercial real estate finance services in Europe, catering to a wide range of clients in the corporate finance sector. The firm was recently named Servicer of the Year by Real Estate Capital Europe. For more information, contact Lisa Williams at lisawilliams@situsamc.com or visit our website.