The debt funding gap is the difference between the amount of loans guaranteed with real estate assets that will mature, and the amounts available to refinance the loans.
“Despite a slight improvement in the situation seen six months ago, the value of loans that might face refinancing difficulties in Romania over the next three years, compared to the amount invested, is one of the highest in Europe,” said Bogdan Sergentu, head of valuations and consulting within DTZ Echinox.
The company official added that reasons for this situation include an abrupt decline in property value, coupled with a low amount of investment.
“While a high debt funding gap can be seen by investors as an opportunity to buy struggling property or portfolios of loans with real estate guarantees, the low amount of investment in Romania limits such opportunities,” Sergentu said.
DTZ estimates the global debt funding gap has been cut by 27% over the past six months. It is now estimated at $142 billion down from $196 billion six months ago, DTZ said in the report “Global Debt Funding Gap”.
In Europe, the debt funding gap remains high compared to six months ago.
“Europe continues to struggle, as downgrades to our capital value forecasts have led to a 4% increase in the funding gap. (…) Compared to our analysis in November 2010, Europe’s debt funding gap has reduced by 27% from $167 billion,” the report notes.
On a country level, the company notes an increase of the debt funding gap in the UK (up 4%, $43.8 billion), Spain (up 17%, $28.7 billion) and Ireland (up 10%, $13.5 billion). Exceptions come from France (down 25%, $8.1 billion) and Germany (down 16%, $5.5 billion), where the DTZ report notes slight improvement.