Nordics Q3-25 Real Estate Credit Market Update

The Nordic real estate lending market is gaining momentum. Transaction activity is recovering, liquidity is returning, and new capital sources are entering the market. But this is not just a rebound. Structural changes in pricing, regulation, and the competitive landscape are reshaping how debt is originated and executed across the region.

Volumes Are Rising — With Sweden Leading

According to JLL’s H1-25 update, Nordic investment volumes rose by ~40% YoY. Sweden led the way, with bond issuances reaching SEK 175bn in 2024, more than 2022 and 2023 combined (Nordic Credit Rating). Demand in Sweden now spans the full capital stack: core refinancing, development loans, and mezzanine.

Finland, by contrast, remains subdued. CBRE’s Market Outlook 2025 shows investment volumes of just €2.46bn in 2024 (up ~8% YoY), while Newsec recorded €1.0bn in Q2-25 (+24% YoY). However, foreign capital continues to dominate: Catella noted that 51% of H1-24 transactions were foreign-led, leaving Finland more exposed to shifts in global capital flows.

In Denmark, developers are returning to the living sector, supported by strong supply–demand fundamentals. Danmarks Statistik confirms robust mortgage lending, but Nordea and Bloomberg Law highlight how Basel IV raises risk weights on construction finance, forcing banks to retrench. This regulatory shift is creating space for non-bank lenders to step in.

Norway is characterised by smaller average loan sizes, but with Norges Bank maintaining elevated policy rates, relative risk/return remains attractive for total return credit investors.

Market-Wide Lending Trends

While country dynamics differ, several trends are visible across the Nordics:

1. Pricing Bifurcation

Investment-grade, large-cap sponsors continue to access financing at highly competitive spreads. In contrast, mid-market loans of ~€10-75m equivalents face less lender competition, giving rise to more bespoke structures and wider margins. This bifurcation is one of the defining features of today’s lending market.

2. Back-Leverage Narrows the Gap

International debt funds are increasingly offering utilising back-leverage, blending senior risk with fund capital to mimic bank-style lending. This reduces the pricing gap versus traditional banks, particularly for core products. Yet access to local bank back-leverage remains extremely limited—forcing funds to rely on international facilities.

3. International Appetite Rising

Global lenders, both banks and credit funds, are expanding in the Nordics. With heightened competition in core European markets, the Nordics represent a growth opportunity: transparent legal frameworks, stable macro fundamentals, and relative underpenetration. Incremental capital can move the needle more meaningfully here than in Germany, France, or the UK.

4. Bank–Non-Bank Collaboration Increasing

Historically, banks and alternative lenders competed head-on. That stance is shifting. Regulation—especially Basel IV, which increases capital charges for construction and development loans—is leading some banks to partner with non-banks, either by providing senior debt alongside mezzanine or by supporting non-bank structures in other ways.

Implications for Borrowers and Investors

For borrowers, the market offers more financing options than a year ago—but also sharper scrutiny. Sponsors with scale, strong equity, and well-located assets are well-positioned. Mid-market developers can access capital but should expect higher margins and more structured terms.

For investors, the Nordics offer an appealing mix:

• Rising volumes and renewed confidence in Sweden and Denmark,

• Defensive stability and yield in Norway,

• Opportunistic entry points in Finland,

• And, most importantly, structural inefficiencies in pricing and lender behaviour that reward specialist insight.

Conclusion

The Nordic real estate credit market in Q3-25 is not just recovering—it is changing. Regulation, international capital flows, and evolving lender strategies are reshaping the opportunity set.

For those prepared to navigate the bifurcation between large-cap and mid-market lending, embrace non-bank partnerships, and deploy capital selectively, the Nordics remain one of Europe’s most compelling growth markets.