The average loan size of Slovakian banks in the area of real estate project financing ranges from EUR 13 to EUR 16 million. The most attractive for them is the housing segment. The percentage of fully compliant loans reached 90%, which placed Slovakia 7th best in Europe. These findings are a result of a new KPMG survey – Property Lending Barometer 2017.
Total investment volume continued to decline for the second consecutive year in Europe, reaching EUR 116.9 billion in the first 6 months of 2017, which is 10% lower than the comparable figure for the previous year. Germany and the UK attracted just over half of the total European transaction volume in the first 6 months of 2017, with 27% and 24% respectively.
In H1 2017, the total investment volume in Slovakia was EUR 154 million and approximately EUR 350 million is expected to transact in H2 2017. The forecasted transaction volume of 2017 is expected to be under the record high figure of 2016, however the number of deals might exceed last year. In terms of both the entire banking sector’s real estate portfolio and their own bank’s real estate portfolio, respondents await a modest increase in the following 12-18 months.
According to the results of the survey, the highest ratio of fully compliant loans is in Sweden (99%), the Czech Republic (94%) and Poland (93%). "In case of Slovakia this indicator reached 90%, which is a markedly positive shift compared to the previous year. Thanks to this, we ranked 7th out of 17 countries surveyed,"said Michal Maxim, Senior Financial Services Manager, KPMG in Slovakia.
The total volumes of real estate loans provided by the banks in the last 12-18 months in the two categories are identical: 50% of them are given for new developments and 50% for income generating projects. This is a change from last year, when income generating projects dominated the financing. The Slovak banks, together with the Austrian, rank among the most open to funding of new projects in Europe. Most European respondents prefer projects that generate income.
The average loan size of Slovakian banks in the area of real estate project financing ranges from EUR 13 to EUR 16 million. "The positive expectations of Slovak bank representatives are also reflected in the financing of larger projects. According to our survey, the preferred loan amount is higher than the current average. Banks would provide loans for real estate projects at EUR 19-28 million, which represents an increase of up to 75% at the upper limit,"concludes M. Maxim.
Just like in previous year, the preferred asset class in Slovakia is residential, closely followed by industrial and logistics asset class. The hotel sector remains the least desirable by banks in terms of financing. The least attractive is financing the construction of hotels and resorts. This trend in Slovakia fully copies the European trend. While in 2016 Slovak banks emphasized on projects with strong business model and high quality of assets, this year they focus on strong financial background of the developer/investor when selecting projects to finance.
This survey aims to provide an analytical overview of the current approach of banks to real estate financing in Europe. The following countries are represented in the 2017 survey: Austria, Bulgaria, Croatia, Cyprus, the Czech Republic, Germany, Hungary, Ireland, the Netherlands, Poland, Romania, Serbia, Slovakia, Spain, Sweden, Turkey and the United Kingdom. The survey participants entailed nearly 100 banks, all of which were active in the real estate market in Europe over the last year. Data collection for this survey took place in May-July 2017.
KPMG Slovensko spol. s r.o.
Marketing and Communication Manager
+421 915 758 925
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 152 countries and have 189,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG in Slovakia is an independent member firm of the global KPMG network. Active in Slovakia since 1991, the firm currently employs more than 300 people and has 11 partners. KPMG in Slovakia provides a wide range of audit, tax, legal and advisory services to domestic as well as international companies across all major industries.