Warnings issued regarding potential financial losses in Estateguru's Real Estate portfolio based in Germany
The German real estate market is facing a series of challenges, with slowing transactions, regulatory uncertainties, and cost pressures within the property development sector causing difficulties. This situation has led to some properties deteriorating, increasing the likelihood of forced sales and potential losses.
In response to these challenges, Estateguru, a peer-to-property lending platform, has warned investors about potential losses due to underperforming property loans based in Germany. The platform anticipates an increase in properties being sold below historical market prices and as a result of oversupply.
In an attempt to address these issues, Estateguru paused all new lending in Germany while addressing the underperformance of the German segment of its portfolio in January 2023. While significant progress has been made on the recovery of the German loan portfolio over the past year, many financed properties have not progressed in construction due to a lack of funding and the exhaustion of borrowers' equity.
As of mid-2025, Estateguru’s German loan portfolio remains burdened by legacy underperforming property loans with approximately €77 million of loans still in the recovery phase, reflecting ongoing challenges with defaults in that region.
Despite strengthened recovery processes and legal partnerships aimed at improving outcomes, the risk of losses in the German real estate loan portfolio continues to present a hurdle. This legacy default situation contrasts with Estateguru’s current focus on more sustainable growth in Baltic markets after exiting less-performing regions such as Germany and Finland.
However, Estateguru has made progress in recoveries, with a total of €17.9 million recovered in 2025 so far, and loan repayments hitting their highest levels this year. The platform anticipates resolving some exposures in 2025, leading to property sales and partial repayments.
For property owners in shrinking regions, falling demand and declining rental income could pose a serious financial risk. Estateguru has allocated approximately €100,000 per month for default recoveries, and in 2024, its total contribution to default recoveries was over €1.1m.
The proportion of the portfolio affected by recoveries in 2025 will depend on the resolution of ongoing enforcement and insolvency proceedings. Additional repayments beyond the sale price are unlikely in most cases, as many borrowers operate single-purpose companies with no significant assets.
In summary, significant legacy defaults remain with €77 million in German loans still under recovery. Investors should expect ongoing losses related to underperforming loans in Germany. The company is shifting towards more stable Baltic markets and enhancing recovery efforts to mitigate losses. The exact quantitative figure for expected total losses from German loans was not disclosed, but the emphasis on legacy defaults and active recovery efforts indicate losses are likely material but gradually being managed.
Investors may experience losses from underperforming property loans based in Germany, as Estateguru's German loan portfolio remains burdened with approximately €77 million of loans still in the recovery phase. In light of these ongoing challenges, the risk of losses in the German real estate loan portfolio continues to present a hurdle for Estateguru.
