Markets may see a rise in the number of distressed real estate loans over the second half of 2012 due to increasingly tight capital markets, according to new research by the real estate management institute of the European Business School and Corestate Capital.
Markets may see a rise in the number of distressed real estate loans over the second half of 2012 due to increasingly tight capital markets, according to new research by the real estate management institute of the European Business School and Corestate Capital.
By 2014, Europe may experience a funding gap of EUR 200 bn, the researchers say. As a result, real estate investors may find attractive opportunities in the residential and retail sectors, especially with respect to secondary and tertiary locations.
The findings were presented at EBS REMI's 13th Annual Real Estate Congress on Thursday.
The report says challenges arising from credit markets are increasingly forcing banks to dispose of the loans and real estate instead of simply prolonging the credit arrangements, a practice which was common over the past few years.
'The time of pretending and extending seems to be over because banks are starting to realise that dealing with distressed debt is not one of their core competencies,' Ralph Winter, chairman of Corestate Capital said in a statement. 'The market for this so called ‘non-core’ debt, together with non-performing loans and the underlying real estate collateral, offer experienced investors with tremendous potential. The problem will take years to solve, but the process is underway.'
