Surveyed banks are still very much interested in providing financing to commercial real estate, despite current economic precariousness, with 56% of surveyed bankers in the CEE region expecting growth of their real estate credit portfolio in the following year. However, according to KPMG’s Property Landing Barometer survey of 40+ banks from the CEE region, including Bulgaria, current situation does force banks to increase interest rates and be more selective when approving new loans.
Large investments were poured into the real estate market in the first two quarters of 2022, but a steep drop followed in the second half of the year, with investors now waiting to see how the situation develops.
Despite the negative effect of the war in Ukraine on economy in general, none of the surveyed bankers have noted a significant direct impact of the conflict on their loan portfolio. The survey also showed no significant changes or tightening of bank rules on loan issuing compared to last year.
The growing importance of sustainable financing (ESG)
Two thirds of surveyed banks already have an ESG strategy for financing of commercial real estate. Nearly one third of bankers surveyed have seen loans rejected due to failure to meet several different conditions, with ESG criteria being among them. More than half of surveyed bankers confirmed their banks have either created or are working on introducing special products aimed at sustainable financing, allowing them to offer lower interest margins, longer maturity, or lower amortization to projects that meet ESG criteria.
About Property Lending Barometer 2022
Property Lending Barometer is a survey focused on bank financing of commercial real estate projects that has been carried out by KPMG for 13 years now. This year, data was collected in June and July, with 41 banks participating from the Czech Republic, Poland, Hungary, Slovakia, Serbia, Croatia, Bulgaria, Romania, North Macedonia and Albania.