2026-10-10 11:55

Can a non-resident get a German bank loan for commercial property?

Yes — though usually not as an individual but through the German limited-liability company (GmbH) that buys the property: German banks lend to such companies routinely, even when all shareholders and directors live abroad. What decides is transparency about the owners and the source of funds, the charge over the property and the equity. According to the Bundesbank, new secured loans to companies above €1 million cost 3.3–4.2% on average in August 2026, depending on the fixed-rate period.

The bank lends to the German company but vets its foreign owners

A non-resident individual finds it much harder to borrow than a German GmbH: to the bank, the GmbH is a standard borrower even when its shareholders and directors live abroad (see Part 9 of the series German Prime Retail). For smaller companies, banks often require a shareholder guarantee or the subordination of shareholder loans, so a loan without recourse to the shareholder (non-recourse) is a point to negotiate, not a default.

Vetting starts with the owners. The bank identifies the beneficial owners and the source of funds (§§ 10, 11 GwG) and screens shareholders and guarantors against EU sanctions lists. For residents of countries on the EU list of high-risk third countries — which has included Russia since 29 January 2026 — due diligence is enhanced and covers the source of wealth (§ 15 GwG). If the checks cannot be completed, the bank must decline the transaction (§ 10(9) GwG).

As a rule, the law allows a loan above €1.5 million or 10% of the bank's capital only if the borrower has disclosed its financial position, above all its annual accounts (§ 18 KWG). A new GmbH has no accounts yet, so the bank looks at the shareholder — all the more so because the shareholder is often asked for a guarantee.

Collateral and equity set the size of the loan

The loan is secured by a first-ranking land charge (Grundschuld), and the bank works from its own cautious valuation of the property — the lending value (Beleihungswert), which may not exceed market value (§ 16(2) PfandBG). The gap between the loan and the price plus acquisition costs (4.5% to 11% of the price, Part 11) is covered by equity or a shareholder loan. The security itself costs money. By our calculation under table B of the GNotKG, a €6 million land charge costs about €19,000 — a 1.0 fee each at the notary (including VAT) and at the land registry.

The shareholder loan, meanwhile, must remain unsecured: any charge in its favour, even a second-ranking one, makes its interest taxable in Germany (§ 49(1) no. 5 c aa EStG).

Average rates sit below prime supermarket yields, but the margin is thin

Exhibit 1. Secured corporate loans cost 3.3–4.2% on average — below prime supermarket yields

New secured loans to companies above €1 million, August 2026	Average rate
Floating rate or fixed for up to 3 months	3.87%
Fixed for 3–5 years	4.21%
Fixed for 5–10 years	3.57%
Fixed for more than 10 years	3.29%
For comparison: prime supermarket net initial yield, Q3 2026	5.00%

Rates are provisional weighted averages from the Deutsche Bundesbank across all sectors, excluding fees; the yield is from BNP Paribas Real Estate. The bank sets the rate for a specific loan according to the property, the tenant, the share of debt and the borrower.

A loan raises the return on equity only if its rate, including fees, is below the property's yield — 3.9% in the Part 11 example. That is why many private investors buy single stores with minimal debt or none at all (Part 4). Factor in trade tax too: without the extended reduction, a quarter of interest and other financing costs above €200,000 a year is added back to its base (§ 8 no. 1 GewStG).

Implications for investors

1. Disclose the ownership chart before the first conversation with the bank. The bank identifies the beneficial owners and the source of funds, and if the checks cannot be completed, it must decline the transaction.

2. Plan equity from the bank's valuation, not from the price. The bank works from the lending value, which may not exceed market value; equity or an unsecured shareholder loan covers the gap between the loan and the price plus acquisition costs of 4.5% to 11% of the price.

3. Borrow only if the full cost of the loan is below the property's yield. In the Part 11 example the property earns 3.9% on the total outlay, while average rates are 3.3–4.2% before fees: the margin is thin or absent.

What to check:
• the ownership chart down to the beneficial owners, and the entry in the Transparency Register (Transparenzregister) — before the first conversation with the bank;
• documents on the source of funds and wealth and, for companies, register extracts with an apostille or legalisation;
• information on the shareholder's financial position if the shareholder is to act as guarantor;
• the gap between the bank's valuation and the purchase price plus costs — and which funds will cover it;
• the shareholder loan — with no charge in its favour, and subordinated if the bank requires it.

Sources: § 18 KWG; § 16 PfandBG; §§ 10, 11, 15 GwG; § 49(1) no. 5 EStG; § 8 no. 1 GewStG; § 34 GNotKG, table B, KV 21200, 14121; Deutsche Bundesbank, MFI interest rate statistics, new loans to non-financial corporations, provisional data for August 2026 (as of 1 October 2026); BNP Paribas Real Estate, retail investment market Germany Q3 2026; Gordon Real Estate Group calculation, October 2026; the series German Prime Retail, Parts 4, 9 and 11. Legal position as of 10 October 2026.

Photo: Jan-Philipp Thiele / Unsplash

This page is general information and not investment, legal or tax advice.

Ilya Gordon