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Commercial Real Estate: Europe: Difference between revisions
→European Systemic Risks Board Report[8]
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* There could be o significant asset value overstatement due to shortcomings in collateral valuation. | * There could be o significant asset value overstatement due to shortcomings in collateral valuation. | ||
* In a number of EEA countries the investment volume over the past four quarters equalled or comfortably surpassed 1% of GDP as of mid-2022. In other countries, the investment volume exceeded 0.5% of the GDP | * In a number of EEA countries the investment volume over the past four quarters equalled or comfortably surpassed 1% of GDP as of mid-2022. In other countries, the investment volume exceeded 0.5% of the GDP | ||
* In most countries default rates for CRE loans are higher than those for the stock of loans in other segments of the economy. '''EU at 15% share of NPLs.''' | * In most countries default rates for CRE loans are higher than those for the stock of loans in other segments of the economy. '''EU at 15% share of NPLs, with only at about 6% exposure to CRE Loans.''' | ||
* Investment funds act as buyers in the bulk of CRE transactions, with a share of around 50%. Private investors account for just over 30% of total transaction value, followed by insurers and pension funds, which account for about 10%. Banks only account for a very small share.[[File:CRE3.PNG|thumb|Distribution of current LTV ratios]] | * Investment funds act as buyers in the bulk of CRE transactions, with a share of around 50%. Private investors account for just over 30% of total transaction value, followed by insurers and pension funds, which account for about 10%. Banks only account for a very small share.[[File:CRE3.PNG|thumb|Distribution of current LTV ratios]] | ||
* Banks are then exposed to CRE markets (i) via credit risk on CRE loans and changes in values of CRE collateral and (ii) as lenders for investment funds. | * Banks are then exposed to CRE markets (i) via credit risk on CRE loans and changes in values of CRE collateral and (ii) as lenders for investment funds. | ||