Europe has a €93 billion real estate debt funding gap as all-in borrowing costs reach a 20-year high.

AEW says the €93 billion figure represents the shortfall between the original amount of secured commercial real estate debt originated between 2018 and 2021, and the amount available for refinance between 2023 and 2026 across all four property sectors in France, Germany, Italy, Netherlands, Spain and the UK.

The manager says borrowing more than doubled in 18 months to 5.9 percent in the middle of 2023, creating the substantial gap. The cost of debt has, however, begun to stabilise across Europe’s major markets. AEW believes interest rate increases introduced by the European Central Bank and Bank of England have worked in bringing down inflation.

The research from AEW — which analyses the debt funding gap as a percentage of total loan originations to rank each country on a relative basis for the first time — has found that Germany is at the most risk fr