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Crunching the numbers on French real estate debt

Market metrics show banks remain the largest providers of property finance in France.

In December 2019, the French real estate debt market became a little less opaque following the publication of a report similar in scope to the property lending market surveys published in the UK by Cass Business School and in Germany by the University of Regensburg.

French professional real estate financing market: current state of affairs, published by French real estate research body Institut de l’Epargne Immobilière et Foncière and consultancy PwC, revealed data for 2018. A follow-on study is understood to be in the works.

The report’s authors said the findings of the inaugural survey showed the French real estate financing market – with €20 billion of new loans in 2018 – to be “very active” and functioning “smoothly”. They noted that, in comparison with the UK and German markets, a high proportion of lending was concentrated around the capital, Paris. They also noted that lending was focused more heavily on offices, with a limited share provided to alternative assets.

Banks were the dominant lenders. Of the €14 billion provided against standing assets and in corporate finance deals, just €1 billion was written by alternative lenders.

The report also showed the overall French loan book to be weighted towards senior debt and to be lowly leveraged. In total, 80 percent of finance was provided at loan-to-value ratios of less than 60 percent, which the authors said was “probably far from the levels reached in the years prior to 2007”.