Commercial real estate financing has become more accessible as debt funds increase their activity and more banks provide back leverage.
In its 2026 European Annual Outlook paper, AEW has said increased competition among banks and non-bank lenders is improving non-financial borrowing terms. Euro zone borrowing costs remained favourable and accretive to equity investors at 3.9 percent at the end of the third quarter of 2025, compared with the average prime cross-sector euro zone property yield at 5.1 percent. The manager says debt is accretive in the United Kingdom as well, but to a lesser extent, as UK swap rates and margins remain higher than in the euro zone.
Based on the latest available data, AEW says five-year swap rates in the euro zone tightened to 2.2 percent from 2.8 percent over the past four quarters up to September 2025. Loan margins have also moved down from 170 basis points to 160 basis points since June 2024. This has allowed for commercial real
