RE Credit Speed Dating - Opening Webinar Presentation

Macro EnvironmentThe European commercial real estate landscape is facing challenges, with rising sovereign bond yields likely to hinder capital value growth.Projections suggest that the 10-year OAT yield may reach 4% by March 2027.CRE Market DynamicsTight property risk premia across sectors, indicating limited potential for capital value growth in the near term. Investment volumes for Q3-25 show a recovery, particularly in Spain and Germany, but overall growth remains softer than anticipated.Property Sector AnalysisOverall Allocation: Returns on prime properties should average at least 9% per annum, pointing to specific market allocations and promising investment opportunities.Office: Demand has stabilized, but vacancy rates are rising, with notable polarization in vacancy trends across different market tiers.Retail: Shopping centers and retail parks are generating robust income returns, bolstering visible total returns.Residential: Valuations remain stable due to limited supply but rising risk-free rates could threaten the strength of valuation recovery.Logistics: The market shows continued positive net absorption and low vacancy rates, indicating the sector is entering in a more mature phase of the cycle.Hotel: Demand is expected to grow, outpacing supply, leading to attractive income returns, yet at very attractive levels.Real Estate Bond Market InsightsThe real estate bond market is highlighted as an appealing funding alternative, with recent bond issuances in 2025 exhibiting declining coupon yields, below 4%, and increasing issuance volumes compared to 2024, +47% YTD as of Oct. 2025.