Tariff-ying Times: Is Real Estate Credit Europe’s Safe Harbor?
Tariffs are more than taxes, they’re volatility catalysts. While headlines focus on trade flows, the deeper impact lies in disrupted capital allocation, heightened macro uncertainty, and a retreat of cross-border liquidity.
European credit markets are holding steady, for now. Despite equity volatility, real estate credit spreads have stayed relatively contained. However, sentiment-driven illiquidity is beginning to emerge, particularly in Q2 origination data.
Europe may be a relative beneficiary. With US macro policy credibility under question, global capital is beginning to rotate into European markets. Real estate credit stands to gain as a perceived safe haven, with a potential dampening effect on lending margins in core jurisdictions.
Real estate has repriced faster than other private assets. This, coupled with robust fundamentals in certain sectors, and less direct exposure to global trading flows, may mean real estate fares relatively well against tariff induced revenue pressures.
Sectors with non-discretionary demand (e.g. living sectors) will show the strongest resilience. Tenant demand is stable, and rent collection remains robust, especially in markets with structural undersupply and domestic drivers.
Tariff shocks are a feature, not a flaw – for disciplined credit. In an environment where traditional lenders are hesitating and consensus capital is stepping back, the end belongs to flexible, fast-moving investors able to underwrite complexity and act defensively.
