Commercial Finance Specialists

Europe's commercial property debt is expected to hit Germany and the UK hardest, CBRE has said.

Europe is facing debts on commercial loans totalling nearly €1 trillion (£903 billion), according to CB Richard Ellis' (CBRE) European Commercial Real Estate Debt ViewPoint, more than half of which is located in Germany and the UK.

CBRE pointed out that not all of the money is bad debt, although the greatest problem for banks will be the €207 billion (£186 billion) pool of loans secured at high loan-to-value on poor quality commercial property.

Iryna Pylypchuk, CBRE's associate director of EMEA research, said that rising values are less likely to rescue commercial finance secured against secondary properties and most of these will struggle to see capital value appreciation.

"In contrast, the large amount of outstanding debt originated at high LTVs against better quality properties, while still at risk, is more likely to be re-floated over time and will only require relatively passive asset management to bring the original equity back into the money," she added.

CBRE recently said that a new report commission by the City of London Corporation showed that the capital remains competitive in its commercial property offering, compared with other leading financial centres.