What is to be expected of the New Basel Capital Accord (Basel II) and how market participants can be adequately prepared is a major concern in the German real estate industry. This paper is an attempt to describe which consequences in financing real estate property developers have to anticipate with regard to the implementation of Basel II. The author therefore briefly explains the fundamental objectives of the renewal of the Basel banking supervisory rules. Basel II mandates differentiated principles for backing credit risks with recourse equity of banks. The starting point for deter-mining these capital requirements is the application of external and internal rat-ings, meaning that operational and other banking risks must be analysed, meas-ured and backed with regulatory capital. The availability and the pricing of debt capital will be risk adjusted and depend on the amount of regulatory equity banks will have to hold in reserve for a credit engagement. In real estate financing, prop-erty developers rely on bank loans to a large extent. Particularly speculative real estate developments represent a considerable risk exposure to banks. Therefore the author will examine the impact of Basel II on the future pricing and availability of debt capital and on the cost of capital in real estate financing in Germany. Fur-thermore the author will show how property developers can react to the changes in financing that lie ahead.