No one knows how many more bankruptcies we will see before Europe’s property market finds its footing again. Default numbers are rising, refinancing deadlines are looming, and nonperforming loans (NPLs) are climbing across the banking sector.

At first glance, this looks like a market to avoid. But that view misses half the picture. Every insolvency, every troubled loan, every mezzanine collapse is also an opening.

For investors who are well capitalised and operationally skilled, these disorderly situations can provide the best opportunities for long-term investment.

From ‘sitting it out’ to structured distress

German banks are conservative by culture. Unlike in the United States or the United Kingdom, they rarely force immediate liquidation.

Instead, they grant extensions, hold on to yesterday’s valuations and hope for improvement, particularly when there a steady cashflow from rents remains. This “sit it out” culture m