The terms upon which real estate debt is lent and borrowed are considered private information, which deal participants can be known to guard fiercely. As a result, the European commercial property lending space is hardly the most transparent marketplace in the world.
However, as Big Data impacts all walks of business life, light will inevitably be shone on the secretive property finance markets. In a busier sector, there is a growing need for lenders, borrowers and brokers to have a clear view of the playing field.
That is why growth plans for the survey formerly known as the De Montfort University Commercial Property Lending Report are positive news for the industry. The biannual report, which was launched in 1997, has found a new home at London’s Cass Business School and its backers want to expand its coverage from the UK to Continental European markets.
Speaking to the report’s author, Nicole Lux, it is clear there are big ambitions. At Cass, the report can tap into an academic institution with plans for a focused real estate research unit and established links to the City of London, not to mention proximity to many of the lending institutions the report surveys.
Crucially, discussions are under way to establish collaborations with universities located in markets including France and Spain. The Netherlands is also in Lux’s sights.
Interestingly, Lux pointed out that lenders she speaks to are actively requesting information on Continental European markets as they expand their lending strategies. French banks, which already speak to Lux for the UK report, are among those eager for more data on their home market.
The De Montfort Report – which we can no longer call it – has gained a deserved reputation for making sense of an opaque market. Its findings, although top level, provide valuable insight into liquidity, pricing trends and leverage across the UK. Expanding its reach into markets such as France and Spain will be a challenge, but a necessary one.
Others are aiming to build data on lending markets. The German Debt Project report compiled by Bavaria’s University of Regensburg has established itself as Germany’s answer to De Montfort, for instance, with a comprehensive survey of the country’s property lending banks. This week, Real Estate Capital reported on CBRE’s latest version of its European Debt Map, which aims to be a tool for comparison of risk and reward across several countries. By the consultancy’s own admission, comparing returns, and risk, for debt markets has historically been “nigh-on impossible” due to the lack of data.
Other advisors which deserve credit for surveying the market include Laxfield Capital – with its longstanding UK CRE Debt Barometer – and, more recently, Link Asset Services’ UK Market Trend Analysis report. Continental European markets are less well-served, however.
Although the amount of information is growing, Europe’s real estate debt markets need more data. Lending is becoming increasingly cross-border and a greater array of organisations offer an evolving cast of borrowers a wider variety of lending products. Information is crucial to lenders considering their strategies and borrowers navigating a busier market, especially in a late-cycle market in which competition is considerable and sensible debt strategies need to be formulated.
As Europe’s commercial property lending sector evolves, efforts to illuminate it can only benefit all involved.
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