The UK and European real estate finance market in 2025 is navigating a complex environment shaped by sustained higher interest rates, constrained capital markets and post-COVID shifts in office use. Valuations remain subdued, deal volumes are relatively low, and both borrowers and lenders are recalibrating strategies amid a changing regulatory and geopolitical backdrop.

Despite the challenges at the end of 2024, there was a sense of cautious optimism. Many participants in the commercial real estate market believed the worst of the market correction had passed. A tentative return to price discovery and deal-making was emerging after a prolonged period of loan extensions. However, that optimism has since been tempered by the uncertainty stemming from President Trump’s re-election in the United States, though there are differing views as to how much this affects commercial real estate finance in Europe.

Refinancing stress avoided — for now

Thro