The financing landscape in Europe is shifting rapidly. After two years of monetary tightening, the European Central Bank (ECB) has started to cut interest rates in response to easing inflationary pressures and weaker-than-expected economic growth across the Eurozone. With the Euribor already falling to pre-2022 levels, the second half of 2025 is shaping up to be a pivotal period for real estate financing in Spain and beyond.

This change is already having a tangible impact on the market. Mortgage costs for households are declining, freeing up disposable income and reducing the risk of defaults in residential portfolios. But the implications go far beyond housing. For institutional investors and developers, the fall in financing costs is reactivating investment pipelines, unlocking stalled transactions, and reopening underwriting models that had been on hold.

Lower rates mean lower yield targets—recalibrated but viable. Value-add and core-plus strategies that had been constrained by debt pricing are gaining momentum again. Sponsors are finding more flexible debt terms and renewed interest from banks, debt funds, and alternative lenders. As capital becomes more accessible, competition for quality assets is expected to intensify in the second half of the year.

Market consensus now points to at least two further rate cuts by the ECB before year-end, depending on inflation dynamics and macro indicators. While growth forecasts for the Eurozone remain moderate, Spain continues to outperform most advanced economies. This relative strength, combined with improving financing conditions, positions the Spanish real estate market as one of the most attractive in Europe for the remainder of 2025.

At CG Capital Europe, we are already observing the shift. Financing discussions are accelerating, asset repricing is stabilizing, and investor sentiment is turning cautiously optimistic. We believe that H2 2025 will offer a window of opportunity for those ready to move decisively, with well-structured deals and realistic assumptions adapted to a new financial context.

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