In a survey published at the start of 2026, institutional investors asked how they planned to gain exposure to European real estate gave one answer more often than any other: they would lend to it. Real estate debt funds ranked as the favoured route into the European market in the 2026 Investment Intentions Survey published in January by INREV, ANREV and PREA, ahead of joint ventures and club deals.
Seven months later, CBRE’s European Real Estate Market Outlook Midyear Review 2026, published in August, forecast further growth for property debt as a distinct investment category in Europe, driven by more non-bank lenders deploying money that investors had set aside for it.
Borrowers found finance easy to come by through the first half of 2026. Lenders undercut one another enough to hold loan pricing down, but the overall cost of a loan still climbed once the European Central Bank raised its policy rates in June, and CBRE expected borrowing costs to come back down over the second half.
The Money Behind the Loans
Insurance companies, with their long investment horizons, supplied 41% of the capital raised for European non-listed real estate debt strategies in 2025, up from just 6% a year earlier, according to the INREV, ANREV and NCREIF Capital Raising Survey published in April 2026. Across all non-listed real estate strategies worldwide, capital raising reached €117 billion over the year, broadly level with 2023 and 2024. Insurers accounted for 15% of it.
In CBRE’s European Lender Intentions Survey 2026, published in June, 72% of the 134 lenders surveyed expected to increase their origination activity in 2026, and only 7% expected a decline, with expected origination totalling around €70 billion and banks and non-bank lenders answering in similar terms. Some 69% of lenders were willing to underwrite development loans in 2026, against 60% a year earlier. Pre-let schemes were the preferred structure, although 43% of lenders were open to speculative development.
Some 86% of lenders were willing to lend against alternative real estate sectors, and offices climbed from sixth to third in lenders’ preferred sectors, behind living and industrial, a change CBRE described as the most notable shift in the survey. Retail recorded the largest gain in sentiment. Terms remained competitive for prime assets at the midpoint of the year, according to CBRE’s midyear review, and most lenders still identified refinancing as the main source of demand for loans. Lenders needed to deploy more capital in the second half to meet their origination targets, which the consultancy expected to add liquidity to the investment market.
Lenders Choose Their Borrowers
Two-thirds of the lenders in CBRE’s survey ruled out lending against a building that falls short of their environmental standards, unless its owner can show a credible plan to bring it up to them, and a growing number priced the difference into the loan. Buildings that met the standard earned better margins, and those that missed it paid more. Banks proved stricter than non-bank lenders on this point, with only 13% saying sustainability played no part in their decisions, against 29% of non-bank lenders.
Because a loan against a building that needs upgrading is, in practice, a loan against the sponsor’s ability to carry out the work, the emphasis on business plans moves part of a lender’s attention from the building to the borrower. Lenders can be expected to look closely at who will deliver the plan, how much of their own money they have committed and how they have handled similar projects before.
Two Models for Owning Real Estate
Among European real estate sponsors, asset managers raise capital from investors and earn fees on the money they manage, while owner-operators buy and hold buildings on their own account, with returns tied directly to how those assets perform. Both models have access to deep pools of capital. Both draw on the expanding credit market.
A fund manager typically arrives at a lender with a vehicle, an investment period and a fee structure agreed with its investors. Sponsors that made the choice of ownership over fees arrive with their own equity at stake. Their return depends on what the building earns. For a lender underwriting a refurbishment or a re-letting plan, that alignment between the sponsor’s capital and the asset’s performance can carry weight alongside the numbers in the business plan itself.
CBRE expected European real estate investment volumes to finish 2026 between 0% and 5% above the previous year, helped by a rebound in activity in the second half. With lenders of every kind looking to deploy more capital, insurers supplying a growing share of the capital raised for debt strategies and investors ranking debt funds as their preferred route into the market, the availability of credit looks unlikely to be the factor that holds that recovery back.
