Lenders across Ireland’s banking and non-banking sectors remain firmly committed to the real estate market, according to KPMG’s newly released Irish Real Estate Lending Survey for March 2025. The report, released this month, captures a cautiously optimistic mood among credit providers at a time when the Irish economy continues to demonstrate resilience.
According to insights from KPMG, forecasters project GDP growth of between 4% and 4.5% for 2025, supported by near-record employment levels approaching 2.8 million people.
Strong foreign direct investment and a robust export base have helped the country weather interest-rate volatility and lingering inflationary pressures.
Against this backdrop, every lender participating in the survey indicated that their real estate lending exposure would either remain stable or increase over the coming year.
Residential assets once again emerged as the clear favorite, ranking first in lenders’ preferences for both 2024 actual activity and 2025 expectations.
Industrial and logistics properties followed in second place, while hotels and resorts took third.
Office and retail assets ranked lower, reflecting heightened caution around occupier demand and cash-flow risks in those segments.
In development lending, banks and non-banks alike are demanding significantly higher pre-letting levels for non-residential projects.
Roughly 80% of respondents now require more than 40% pre-letting for office schemes, rising to 85% for retail.
Lenders are also showing a clear preference for prime Dublin locations, with considerably less appetite for regional or tertiary markets outside the capital.
Loan-to-cost and loan-to-value ratios remain conservative, particularly in more volatile asset classes.
Average margins over three-month Euribor range from 3% for residential investment loans to as high as 8% for certain industrial or office development facilities, with non-bank lenders generally quoting higher pricing than traditional banks.
Interest-rate hedging requirements have become stricter.
More than half of lenders now insist on hedging over 50% of exposure for investment loans, while development facilities see similar discipline.
Cost-overrun facilities are routinely set at 15-20% or higher to protect against construction inflation.
Environmental, social and governance considerations have shifted from niche to standard practice.
Eighty-eight percent of lenders actively seek ESG-linked opportunities, and 76% are prepared to adjust loan pricing based on borrowers’ achievement of agreed sustainability targets.
Investor pressure and upcoming regulatory requirements are the primary drivers behind this trend.
When assessing new proposals, lenders continue to place greatest weight on three factors: the quality of the asset and its business plan, the reputation and track record of the developer or operator, and the level of equity committed by the sponsor.
Planning status and pre-letting or pre-sales rank lower but remain important.
Looking ahead, respondents identified planning delays and legislative changes as the biggest short-term hurdles, followed by interest-rate volatility and construction-cost inflation.
Over a three-year horizon, the availability of suitable land and assets also climbs the worry list.
Despite these pressures, the overall tone is constructive.
A strong majority of lenders anticipate growing their Irish real estate books in the year ahead, signaling confidence that high-quality projects with solid fundamentals will continue to attract capital.
Hazel Cryan, Partner and Head of Debt Advisory at KPMG in Ireland, noted that the survey underscores a market “grounded in promoter quality, robust business plans, and meaningful equity contribution.”
As Ireland’s economy maintains its momentum, the lending ecosystem appears ready to back carefully structured real estate initiatives that meet today’s stricter risk, pricing and sustainability standards.
