The CREFC Quarterly Market Sentiment Survey: an improved outlook for the real estate finance market

17 April 2024

In March 2024, CREFC – the trade association for real estate lenders and the real estate finance market in Europe – published the results of its Q1 2024 market sentiment survey (survey) of CREFC Europe member firms (members) which provides an indication of current market sentiment and an analysis of the UK, Irish and other European markets in Q1 2024[1]. Among other things, the survey considered risk-adjusted returns and market conditions for commercial real estate (CRE) and looked to various indicators of market sentiment, such as pricing, lending terms, economic and political environment and expected growth prospects.  

In light of the ongoing uncertainty being felt by many market participants as a result of macro-trends across the UK and Europe, the survey is an interesting barometer of the current temperature of the real estate finance market.

Whilst the results of the survey show a diverse range of views amongst members, the general sentiment demonstrated is one of cautious optimism as members look forward to 2024 being a year of improved market conditions. Whilst continued macro-uncertainty due to geopolitical challenges, “higher for longer” interest rates and the turbulent socio-economic environment across Europe continue to colour the market outlook to a certain degree, signs of inflation coming under control suggest that 2024 has the potential to be a story of some rejuvenation with the emergence of green shoots across parts of the economy. The optimistic outlook of the survey is particularly positive for the UK real estate market given that over 50% of members taking part in the survey are headquartered in the UK.

The key takeaways from the survey include that member sentiment on:

  • overall market conditions saw a meaningful uplift from Q4 2023, with pessimistic responses nearly halving and optimistic responses doubling. The largest shift in sentiment was observed in European and UK conditions, while Irish conditions remained stable; 
  • traditional real estate sectors (offices, retail, industrial/logistics) improved, and all accommodation-based sectors remained positive;
  • retail returned to just above zero for the first time in two years and improved sentiment for offices was noted, although it was still very negative and the downturn in the office market experienced in the UK and other parts of Europe had not yet reached Ireland; 
  • "beds" in Ireland and Europe was weaker than in the UK;
  • pricing and lending terms stayed largely flat; 
  • the economic environment and real estate increased significantly, marking the best quarter in 10 and eight consecutive quarters respectively. Members commented that “early signs that inflation is coming under control which gives confidence that interest rates may begin to fall” and that they’ve seen “improving origination volumes with opportunities to finance loans across the capital stack”; and
  • the political environment slightly declined due to a shift in views on European markets, potentially influenced by the rise of populist parties ahead of the 2024 elections.

The survey also examined the risk-adjusted returns expectations for CRE debt relative to other asset classes and the expected growth prospects across key market participants. The expectations for risk-adjusted returns for CRE debt slightly declined in Q1 2024, continuing a trend from previous quarters. Expected growth prospects improved across all key market participants, with debt funds still expected to outperform other types of lenders in the market. With improved sentiment in market conditions and real estate, there was a slight uptick in expected risk-adjusted returns for slightly higher risk profiles across all each of asset type, location and lending strategy.


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[1] Members who participated in the survey were predominantly made up from debt funds (43%), commercial banks (27%) and insurance companies (22%).