Europe鈥檚 property loan portfolio market could top 鈧�100bn this year, according to research by PwC.
The firm said the continent鈥檚 secondary market for loan portfolios is set to grow this year, with around 鈧�40bn in progress.
Richard Thompson, PwC partner, said real estate-backed assets continue to be a 鈥漨ajor focus鈥� for large investors. 鈥淲e expect this asset class to dominate deals in 2015,鈥� he said.
Richard Thompson said that, while Ireland, Spain and the UK will continue to be strong this year, significant growth in activity in the Italian, Dutch and Central & Eastern European markets is likely.
The markets, which accounted for less than 10% (鈧�9bn) of transaction volumes last year, could more than double in size to around 鈧�20bn this year.
鈥淭he market continues to be dominated by major financial investors, all of which have significant committed funding,鈥� Thompson said. 鈥淢any are looking at emerging European economies to escape the high levels of competition in UK, Irish and Spanish markets.鈥�
European loan portfolios with a face value of 鈧�91bn were sold in 2014, up from 鈧�64bn the previous year.
Commercial real estate lending dominated transactions last year, accounting for over half deals done 鈥� 鈧�49bn in face value, up from 鈧�18bn the previous year.
Thompson said the loan portfolio market 鈥漴eally came alive鈥� in 2014.
Research from Capital Economics found that the outstanding stock of property debt in the UK fell from 拢177bn to 拢158bn last year, or from 8.9% to 8.2% of bank and building societies鈥� overall loan books. The banking sector鈥檚 exposure to property has now fallen by a quarter since peaking in mid-2009.
Cushman & Wakefield鈥檚 EMEA corporate finance team, meanwhile, recorded 鈧�80.6bn of closed European commercial real estate (CRE) and real estate owned (REO) transactions in 2014 鈥� more than two-and-a-half times the volume recorded in 2013.
The advisory firm said that, although it is anticipated that it will be difficult for 2015 to reach the 鈧�80bn mark, there are early signs ithat investors remain hungry for distressed European assets. Between 鈧�60bn and 鈧�70bn of closed CRE loan and REO transactions are forecast in Europe for 2015.
PwC said last year鈥檚 Asset Quality Review brought to light 鈧�136bn of troubled bank loans which may require reclassification on balance sheets.
Thompson said: 鈥淲hilst some of the 2014 deals were in part AQR driven, I expect this to play a bigger role in deals in 2015 and beyond.鈥�
PwC research shows that banks continue to hold more than 鈧�2tn of unwanted lending.
