19.03.10
According to CB Richard Ellis’ (CBRE) European Commercial Real Estate Debt ViewPoint, issued today, €970 billion of European commercial real estate debt was outstanding at the end of 2009. Mirroring their typical share of European commercial real estate investment activity, Germany and the UK account for over half of the €970 billion total, with 24 per cent and 34 per cent respectively. Although a large legacy to manage, not all of the €970 billion is bad debt and by far the greatest problem for banks is the €207 billion pool of loans secured at high LTVs on poor quality real estate.
KEY MESSAGES
- €970 billion of European commercial real estate debt was outstanding at the end of 2009.
- Mirroring their typical share of European commercial real estate investment activity, Germany and the UK account for over half of the €970 billion total, with 24 per cent and 34 per cent respectively.
- Although a large legacy to manage, not all of the €970 billion is bad debt and by far the greatest problem for banks is the €207 billion pool of loans secured at high LTVs on poor quality real estate.
- Ultimately there will be some forced sales. However, with asset protection schemes already established in Ireland, UK and potentially in Germany, these are phasing the release of poorer quality assets into the market. As a result fire sales of secondary assets are not expected to flood the market.
- Banks will continue to control the process and the flow of assets onto the market in what is likely to be a long-term solution deployed over the next ten years
