The cracks are showing. Across Europe, developers and property companies are grappling with mounting financing costs, stalled projects and gaps in refinancing. However, while others see distress, some investors see an opportunity.
Our newest whitepaper, ‘The NPL real estate market in 2025‘, examines this shift, exploring why non-performing loans (NPLs) are becoming more important, where the risks are concentrated and how data-driven due diligence can help to distinguish between chance and chaos.
Pressure builds – and creates opportunity
According to the European Banking Authority, non-performing loans (NPLs) volume in the EU climbed to €357 billion in 2024. The proportion of bad loans increased slightly to 1.93%. While this may sound moderate, there is a deep split behind the average.
While Southern Europe continues to offload toxic loans from its balance sheets, new NPLs are emerging in Northern and Central Europe, particularly in the commercial real estate sector.
In Germany, the volume of non-performing loans (NPLs) in the real estate sector jumped to EUR 10.3 billion, which is the highest level in a decade. Rising interest rates and falling property values are forcing lenders to reassess their entire portfolios. Assets that were once considered stable are now under review.
What this means for investors
NPL investing isn’t a quick trade. It’s a discipline that requires transparency, patience and precision. Each loan is comprised of layers of contracts, securities and valuation data. Understanding the real exposure requires structured due diligence, but this is where processes often break down. Documents are scattered across institutions, risk data is incomplete and timelines are lengthy.
This is where using the right technology becomes crucial. With the Drooms platform, the due diligence process becomes seamless. AI-powered document analysis and automated risk flagging streamline time-consuming processes, enabling every stakeholder to access a single, verified source of truth. Secure hosting in Germany and Switzerland ensures that even the most confidential portfolio data remains fully compliant and protected.
Read the full whitepaper
How will Europe’s NPL market evolve in 2026? Which regions and asset types show real turnaround potential? And how can technology help manage the growing data load?
