Sentiment survey: slightly improved industry mood

The latest Commercial Real Estate Finance Council Europe sentiment survey paints a picture of an industry operating in uncertain conditions, but responses in some areas were slightly more positive than the previous three months.

For instance, respondents to the Q3 survey – which was conducted between 28 June and 22 July – were, on balance, negative about the political and economic backdrop, although there was an increase in respondents who saw unchanged conditions in both areas.

Similarly, while there remained a lot of negative sentiment towards the UK, more respondents reported seeing stable conditions and there was even a rise in those seeing a moderate improvement.

Comments from respondents included one view that there is a lot of liquidity, with most lenders ignoring risks but remaining conservative. Another described a difficult market to lend into, while a third noted huge demand for a few low-risk deals.

The anonymous survey is sent to up to three key contacts at each firm in the CREFC Europe membership. CREFC Europe believes respondents for this quarter account for an aggregated commercial property loan book of more than £170 million (€185 million).


Our latest market sentiment survey was conducted during a period dominated in the UK by the Conservative Party leadership contest and, on the global stage, by escalating trade tensions precipitated by US policy, as well as military tensions between the US and Iran, writes David Dahan, industry initiatives director at CREFC Europe.

Perceptions of the political environment remained negative, with more than 70 percent of respondents believing it to be worse than in the previous quarter. However, while respondents’ sentiments towards the economic landscape remained negative, the gradual shift towards ‘no change’ observed last quarter continued in Q3.

Responses showed an undertone of uncertainty and caution. The divergence in perspectives on market conditions in the UK and the rest of Europe was still significant. Although the percentage of those who saw worse conditions in the UK fell from 65 percent to 49 percent, only 12 percent saw worse conditions in continental Europe. Respondents expected lower levels of debt availability in the UK, but the opposite in Europe.

Pessimism not increasing

Although respondents were still negative on UK conditions and real estate fundamentals, pessimism did not worsen relative to the Q2 survey. For example, the proportion of respondents who perceived liquidity, margins and lending terms to be broadly the same as the previous quarter increased substantially.

There were signs of stabilisation in the office and industrial sectors. However, negative opinion and a deteriorating view on retail remained universal across all types of respondent. There continued to be healthy signs of optimism towards accommodation-based real estate sectors, with sub-sectors like hospitality showing positive momentum.

Views on which opportunities would yield the most attractive risk-adjusted returns reflected the diverse nature of the lending market. Although non-banks seemed to favour taking lower risk on the location of assets, there was a range of views on types of lending and asset types. Commercial bank respondents continued to show a slightly higher risk appetite than at the beginning of the year, while other participants appeared to be lowering their risk budget.

Undoubtedly, the mood has been clouded by the political overhang, which has contributed to a somewhat subdued market. However, some participants pointed to the Q3 window to execute on transactions, ahead of an expected slowdown as the 31 October Brexit deadline approaches.