Debt, Interest Rates, Real Estate Prices – What’s Next for the Property Market
- Gunnar Gombert STRATEGY CONSULTING
- Aug 18
- 2 min read
Updated: Aug 21
Government budgets around the world are under pressure: trillions in sovereign debt must be refinanced – and no longer at zero rates, but in a higher-for-longer environment. Sounds like dry macroeconomics? It isn’t. Because what happens in the bond markets has a direct impact on real estate.
Here are the key consequences for the property market – and why smart strategies are needed now more than ever.
More Expensive Money – Less Room to Maneuver
When governments pay more to refinance their debt, financing costs for real estate rise as well.
Loans become noticeably more expensive.
Leveraged returns shrink.
Buyers simply cannot bid as high.
👉 Bottom line: Price declines are no surprise, but a logical consequence.
Banks Are Getting Cautious
The days of 70–80% loan-to-value ratios are gone. Lenders demand more equity and underwrite more conservatively.
Fewer deals per investor.
Lower transaction volumes overall.
More “equity-heavy” financing structures.
👉 This slows the market down even further.
Values Under Pressure
Rising base rates push up discount rates. For valuations, that means: down.
Sellers hope for yesterday’s prices.
Buyers calculate with today’s realities.
The result: a widening bid-ask spread.
👉 Market liquidity falls, price discovery drags.
The Refinancing Wall
Not only governments, but also real estate investors are facing a so-called maturity wall. Loans taken out in the low-interest era now need to be refinanced at much higher costs.
DSCRs no longer add up.
Banks are becoming more selective.
Distress and forced sales are on the rise.
👉 This is where the next wave of opportunities – and risks – is forming.
Real Estate vs. Bonds – Who Wins?
For years, property was the go-to yield alternative. Now bonds are back: liquid, safer, and with attractive coupons.
Capital flows are shifting.
Real estate must prove itself on fundamentals: stable cashflows, ESG credentials, location quality.
👉 Only assets with a solid foundation will convince investors.
More Nervousness in the Market
Because large shares of sovereign bonds are now held by return-hungry international investors, markets react more quickly to jitters. Any movement in bond yields can shake credit markets – and make real estate investors pause.
What Does This Mean for Investors?
The environment is challenging – but not hopeless. Opportunities lie where others are not looking right now:
Buy below replacement cost: Smart entry points secure long-term upside.
Creative capital stacks: Combine multiple financing layers to optimize returns.
Early refinancing: Act today to avoid unpleasant surprises tomorrow.
Back to basics: Cashflows, ESG performance, and quality matter more than Excel projections.
📌 Gunnar Gombert Strategy Consulting supports investors, developers, and owners in positioning themselves in this higher-for-longer environment.
