The cost of mezzanine financing is forecast to decrease to 8% by the end of 2012 as a result of increased competition in the market, Natale Giostra, head of CBRE’s debt advisory unit in London, told PropertyEU during the EXPO REAL fair in Munich.

Returns are already down to about 12-10% at present, versus 15% at the beginning of the year. ‘Mezzanine financing for prime central London assets will become less expensive in the next few months, going down to as much as 8% in the future, while more risker assets will be financed at a cost of 10 to 12%,’ Giostra said. ‘This is a trend we are already experiencing as Europe gets in line with more mature mezzanine funding markets such as the US.’