London offers property lenders the best returns among the largest markets in Europe, according to CBRE’s latest European Debt Map.
Returns for senior lending are higher in London (2.65%) than in other major markets such as Berlin (1.42%) or Paris (1.52%).
Central and Eastern Europe have the highest returns overall in Europe, led by Bucharest and Warsaw at around 5%, due to the relative illiquidity of those markets.
Among the major markets in Western Europe, the UK has higher margins and higher total cost of debt than Germany and France.
Although Spain’s cost of debt is similar to the UK’s across office, retail and logistics investment, the cost of debt for office development is considerably higher at more than 12.6%.
Marco Rampin, head of debt and structured finance for continental Europe at CBRE, said: “The most recent research suggests that lender appetite will remain extremely keen across Europe, given the strong low-risk returns available.
“Accordingly, lenders should take every opportunity available to expand and deepen their network of contacts with potential borrowers, to ensure access toe very possible lending opportunity.”
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