After the interest rate turnaround comes the wave of refinancing
The good news first: long-term capital market interest rates have stabilized, the first interest rate cuts by the central banks have taken place, and
prices on the real estate markets are stabilizing. Following the turnaround in interest rates, the yield gap between real estate investments and German government bonds has now widened significantly again. This means that the market environment for long-term investors has improved considerably over the past twelve months.
Now for the bad news for real estate investors: In the low interest rate era, many have provided themselves with long-term cheap loans, which gradually expire and have to be refinanced. The conditions for such follow-up financing have deteriorated significantly as a result of the interest rate turnaround: In addition to the interest costs, which have in some cases more than tripled since the interest rate turnaround, the values of secured properties have often fallen.
Banks have to comply with stricter regulatory requirements and are less willing to take risks. In many cases, much less debt capital can be granted for follow-up financing.
Property owners are threatened with sensitive financing gaps.
For the entire German institutional real estate market, these gaps add up
to approximately 20 billion euros in the period 2024 to 2028, with the peak being reached in 2026.
Most of the loans where refinancing becomes
problematic concern office and retail properties. In logistics and housing, on the other hand, the deficit is
relatively small.
Strategies for successful follow-up financing
The most important levers for successful follow-up financing lie in the
long-term earnings and value stability of the real estate investment. Property owners should ensure that they maintain or even improve the quality of the location, property, space and tenant quality of a property to be refinanced, as well as its sustainability properties.





