Aareal increases US lending, but Western European volumes drop

The German bank generated €9.5bn of new real estate loans in 2018, up 8% year-on-year despite lower activity in Western Europe.

An increase in lending activity in the US property market helped to boost Aareal Bank’s new lending volumes last year, which went up by 8 percent to €9.5 billion.

The German bank’s financial report for 2018 showed it to have generated €3.7 billion of new real estate loans in the US, €600 million more than during the previous year. Northern European markets were also an area of growth for Aareal: new business in these markets accounted for €600 million in 2018, compared with what the bank called “marginal new business” volumes in 2017.

By contrast, fresh business in Western Europe was down by €700 million to €3.5 billion, putting the region behind North America as a proportion of new business volumes. Aareal noted that competition to finance commercial properties had remained fierce in many markets last year. It said margins in the European and US markets were under pressure, although they remained “considerably higher” in the US than in Europe.

In Europe, the bank said that transaction activity “fell sharply” compared with 2017, while traded volumes in Asia-Pacific “remained high” overall.

In the last few years, expansion in North America has been a priority for several German banks as they aim to lend more in markets that generate higher margins than Germany.