Industrial/ logistics most attractive asset class post-COVID, KPMG barometer shows
The industrial/ logistics asset class is presently the most attractive for a majority of banks in Central & Eastern Europe (CEE) following the breakout of the COVID-19 pandemic, according to results from the latest edition of KPMG’s Property Lending Barometer (PLB), an annual study by the global audit and advisory firm that attempts to measure banks’ lending sentiments in Europe’s property markets. That preference lies in contrast to where most bank finance in Europe has typically landed prior to COVID: the office segment.
Meanwhile, the least preferred asset class on average indicated by survey respondents was hotels & resorts – traditionally least preferred and perhaps no surprise given the lockdowns and border closures that have squeezed the life out of European tourism.
In this year’s survey, KPMG included over 60 participating lending institutions in 11 European countries which provided their responses to questions about their level of impaired loans, real estate’s importance as part of a bank’s strategy and their loan size averages and preferences, among others. In addition to providing detailed information on lending sentiment and the European property markets as a whole, the 2020 edition of PLB also includes individual real estate market snapshots that entail insights for each of the countries included.
KPMG surveyed participants in the 11th edition of the Barometer via face-to-face and online means in May/June of this year. Most banks were local and respondents comprised the heads of real estate/project financing or risk management at their lending institution. While most of the markets surveyed are countries in CEE, the survey also covers Finland, the Netherlands and Cyprus, which have been presented separately in the study due to their different market characteristics.
In 2020, KPMG’s survey was conducted in unprecedented times for the global economy; for sure, the COVID-19 crisis is likely to exert great influence over lending institutions’ perspective on their property lending portfolios and affect their eagerness to fund real estate projects going forward, as the Property Lending Barometer results show.
One finding in the survey was unanimous: PLB survey participants agreed that the macroeconomic conditions in their markets would affect both what happens in the property markets in terms of projects initiated as well as how the lending market will determine its actions and what sorts of property developments are likely/unlikely to receive funding.