Real Estate

06 May 2014

Alternative Lending Pays Off  

Real estate investors are seeing the Netherlands as a haven from rising prices that are crimping returns in Europe’s hottest property markets.

Real estate prices are climbing in prosperous German cities like Munich and Frankfurt, and London’s booming property market presents similar challenges. Real estate prices in the Netherlands, by contrast, fell following the global financial crisis and have only just begun to recover, creating attractive entry points for investors.

Low interest rates add to the Netherlands’ appeal. However, many of the biggest Dutch banks remain reluctant to lend in the aftermath of the crisis, which has led to tighter regulation of their activities. This gap in financing has not gone unnoticed.

Insurance companies and private equity groups are leading a wave of alternative lending sources across Europe – like an investment partnership between Prudential Real Estate Investors and Dutch pension fund manager Algemene Pensioen Groep, which last month raised €265 million to provide financing for Dutch real estate.

According to property firm Cushman & Wakefield, for instance, the number of debt funds and private equity lenders providing property lending has grown by 30 percent over the past year. By sustaining the real estate market, the trend might even entice traditional banks to start lending again.