Banks turn off tap on loans for commercial real estate

Bank financing is the most popular and available form of financing commercial real estate in Poland. Due to the pandemic and the economic slowdown, the cock with loans was screwed. Hotel and commercial properties have the greatest difficulties in obtaining funds. Banks still remain open to finance warehouse, office and housing investments, but the parameters that can be obtained are more conservative. CBRE experts indicate that for investors it can be an impulse to look for alternative financing methods, whose availability in Poland is still limited. However, the current situation shows that dependence on one form and a lack of diversification of sources of financing commercial real estate is a problem.

“Banks in recent months are selective in financing commercial real estate. Warehouse, office and housing investments are the most popular. Commercial property financing is limited to the best facilities and only by some banks, while obtaining funds for hotels is practically impossible. The banks have also tightened the criteria for granting financing and are currently offering lower LTV and LTC parameters, while expecting higher levels of pre-letting and pre-sale in relation to housing projects. We are also observing an increase in credit margins by 0.3-0.6% and extending the processing time for applications,” Adam Łuciuk, head of the CBRE investment financing department, said.

Hotel real estate is the most affected sector. The temporary closure of these facilities, travel restrictions, closed borders and stricter sanitary standards will resonate in hotels operating results for a long time to come. Banks will make decisions regarding their financing withholding until they receive information about operating results after re-opening. However, you will have to wait at least six months for reliable data. Until then, it will be difficult to obtain funding, although there may be exceptions for the best projects.