CREFC sentiment survey: Situation remains precarious

On the face of it, the latest sentiment survey by industry body the Commercial Real Estate Finance Council Europe suggests an improved mood among Europe’s property debt professionals.

The Q4 survey was conducted between 27 September and 20 October, when concerns about the impact of the second wave of covid-19 across Europe were growing. Despite that backdrop, half those surveyed believed real estate finance market conditions had improved, while 27 percent thought things had got worse.

However, sentiment comes from a low base, following the greatest shock since 2007’s financial crisis. Comments by the survey participants suggest that, as well as a belief that there are opportunities in the market, there is plenty of concern about covid’s continued ability to cause havoc.

The survey, conducted anonymously, was sent to up to three key contacts at each firm in CREFC Europe’s membership.

A range of borrower and lender types, as well as advisory roles, were represented.

Describe in a few words how you feel about the market

“Too many participants in denial when it comes to downward valuations and financial covenants”

“We are being very cautious with respect to new lending”

“At some point something will need to give, and it will not be pretty”

“Calm before the storm”


“There will be opportunities to finance core assets at interesting terms”


“There is greater risk, but greater opportunity”

“High competition for most prime assets”

“Second-wave lockdown restrictions are turning short-term summer optimism around recovery timelines significantly more bearish”

Expert analysis by David Dahan, industry initiatives director at CREFC Europe

This may be a pause, rather than a reversal of negative sentiment.

Our Q4 2020 survey was conducted amid extensions to eviction moratoria and support packages, as well as growing concerns about the second wave of the coronavirus.

These concerns seemed to lead to a more widespread belief that the pandemic’s effect would be felt more sharply and for longer throughout the economy and the real estate industry. Yet the results show a degree of stabilisation and even a slight improvement in sentiment about the debt market.

Only 28 percent and 26 percent saw overall conditions in the UK and continental Europe, respectively, as worse than in Q3, when the figures were 52 percent and 43 percent.

There were more positive views about margins, lending terms, financial covenants, new business volume and real estate fundamentals. Even perceptions about the economic environment were mildly better than in the previous two quarters. Negative sentiment towards the most challenged sectors, such as retail and hospitality, seemed to have peaked.

With a more positive outlook for new business, debt funds were seen as the best poised to capitalise.

However, judging by respondents’ comments, this may be a pause in negative sentiment rather than a reversal. At the time of writing, the unknown outcomes of the US election, Brexit negotiations and the management of the second wave of the pandemic were all contributing to a heightened sense of uncertainty and caution.