Banks to pump more capital into property
Two-thirds of domestic banks expect a higher volume of real estate loans to feature in their lending portfolio in the next year to a year and a half. At the same time the market is seeing a year on year increase in the number of banks willing to offer credit tagged to an interest rate of fewer than two percent.
Those are two conclusions of research conducted for the Property Lending Barometer 2016 produced by consultancy KPMG. While noting the pressure for cheaper loans, the firm also drew attention to how agreed repayment periods are lengthening.
“Extending the credit amortisation period, or more precisely reducing the proportions seen in repayments of the principal during the course of the lending, is one key demand of investors,” said Pavel Kliment, a partner at the Czech branch of KPMG. Debtors often consider a longer repayment period as a higher priority than pressure on interest margins, he added.
Czechia boasts the most advantageous conditions for the financing of property trades in Central Europe, analysis carried out by another consulting firm, BNP Paribas Real Estate, has shown.
“The Czech market in commercial property has healthy fundamentals in all segments in terms of the demands of leaseholders, the infrastructure and the outlook for economic growth, which is well above average,” said Lenka Šindelářová, head of consulting at the Czech office of BNP Paribas Real Estate. KPMG added that 95 percent of real estate loans awarded by domestic banks were problem-free. Parallel situations are seen, for instance, in Sweden, Germany and Great Britain.
Despite that picture, the banks’ hunt for clients has prompted a first intervention from the Czech central bank. The regulator has ordered the domestic branch of Moscow-headquartered Sberbank not to close credit deals in the financing of construction investments and commercial property. It claims the financial institution has not held to regulations with sufficient prudence, reported news server iDnes.cz.
Generally it now applies that Czech banks even venture into giant transactions. Lately, a group of banks led by ČSOB and including Česká spořitelna, Komerční banka and the domestic branch of Italy’s UniCredit Bank, shared in the major part of the long-term €1.4bn refinancing of the huge debt being carried by developer group P3 Logistics Parks.