CBRE recently carried out its latest Lender Survey, an annual survey of companies providing real estate loans. Conducted in April and May of this year, CBRE’s 2024 Japan Lender Survey asked respondents about the loans extended during the 2023 financial year (FY 2023, which in Japan runs from April 2023 to March 2024) and their expectations for FY 2024. The results underscore the fact that the lending environment remains accommodative.

The percentage of respondents indicating that 100% of their loan volume was for new acquisitions in FY 2023 reached 25% for senior lenders and 43% for mezzanine lenders, both up from the previous year. Lenders clearly remained committed to providing funding for new real estate acquisitions in 2023. Lending conditions, including LTV and spread, also remained largely unchanged or eased slightly, with lenders to the hotel sector in particular becoming significantly more accommodative than was previously the case.

In terms of the outlook, approximately 60% of senior and mezzanine lenders indicated that they expected their new loan volume in FY 2024 to exceed that of FY 2023. Lenders’ attitudes towards lending conditions and real estate pricing remain largely positive and continue to provide tailwinds for the real estate investment market.

When asked to forecast the interest rate environment over the next year, 80% of respondents predicted additional rate hikes of up to 50 bps, with none predicting rises beyond this level. This suggests that lenders are basing their lending policies on an anticipated moderate increase in interest rates. Should interest rates be hiked more significantly, there is a distinct possibility that lenders may be forced to reconsider their lending criteria.

Download Japan Lender Survey 2024 here.