BF.Quartalsbarometer Q1-2025: Real Estate Lenders Start into the Year with Minor Setback

• Sentiment index for real estate lenders drops from -9.89 to -10.94 points
• After being in ascent for five consecutive quarters, the barometer score went back down for the first time
• Fewer panel participant aware of growth in new lending
• Visible increase in smaller lending volumes
• Margins for inventory financing and developments financing softening slightly

Stuttgart, 5 March 2025 –     In Q3 2023, the BF.Quartalsbarometer had reached its lowest point at -20.22 while its historic peak score of +8.11 was achieved in Q1 2015.

“I wouldn’t overrate the modest dip seen in Q1 2025. To be sure, financiers have generally held back, relatively speaking. Still, I’ve noticed a certain openness toward lending volumes of up to 20 million euros. There is also a continued preference for inventory financing over property development financing. The moderately positive trend has now persisted since the ExpoReal trade fair and gained further momentum since the start of 2025. This should not let us forget that we are still deep inside negative territory at -10.94 points,” commented Fabio Carrozza, Managing Director of BF.real estate finance GmbH, a subsidiary of BF.direkt AG.

“The declining barometer score arguably reflects the repercussions of the economic trend in Germany, the foreseeable difficulties to form the next German government, and the political development in the United States of America. The mounting global risks triggered by the erratic US foreign policy are not what it takes to inspire confidence among lenders. Nor has the looming threat of rising inflation rates and thus of rising lending rates been defused for good,” said Professor Dr. Steffen Sebastian, tenured chair of real estate financing at the International Real Estate Business School (IREBS) of the University of Regensburg and scientific advisor of Quartalsbarometer.

What sort of developments prompted the shifts in barometer scores? Highly important for the index score is the general assessment of financing terms and conditions by survey respondents. Here, the number of interviewees who expect the terms and conditions to tighten increased to 45.0 percent (+6.1 pp).

Analogously, the trend in new lending was received a slightly more pessimistic assessment. A mere 32.5 percent (-6.4 pp) still anticipate an unchanged or lately accelerating business volume in new lendings. Conversely, 55 percent (+13.3 pp) reported stagnation in the new lending business.

Furthermore, the balance in lending volumes has shifted toward smaller volumes. 51.3 percent (+11.3 pp) noted that the average lending volume amounts to less than 10 million euros. The share of respondents quoting an average between 10 and 50 million euros was down to 28.2 percent (-14.7 pp).

Margins, by contrast, have improved from the borrower’s perspective: Margins have been softening slightly both in the property development segment and in inventory financing. In inventory financing, they fell from 239.5 basis points in Q4 2024 to 223.7 basis points (-15.8) while margins in development financing declined by a modest -6 basis points from 337 to 331 basis points. Fabio Carrozza commented: “The creditworthiness of any player still in the game even after over two years of real estate crisis is sound. Borrowers of this type tend to benefit from more favourable loan terms.”

About the Methodology

The BF.Quartalsbarometer is compiled on behalf of BF.direkt AG, a specialist for real estate project finance, by analytics firm bulwiengesa AG. The index provides a comprehensive picture of the sentiment and business climate among real estate lenders in Germany.

For the survey underlying the BF.Quartalsbarometer, a total of about 110 experts are polled four times a year, all of whom are directly responsible for approving loans to real estate companies. The panel is staffed with representatives of diverse banks and other types of financiers. The BF.Quartalsbarometer score is compiled from diverse questionnaire components: the assessment of changes in the terms of financing, the performance in new lending, the amount of loan tranches granted, the risk tolerance of lenders by asset class, the level of LTV/LTC ratios, the development of margins, the importance of alternative funding options, and the trend in liquidity costs.

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