3,882
edits
Commercial Real Estate: Europe: Difference between revisions
→European Systemic Risks Board Report[8]
| Line 264: | Line 264: | ||
* 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 most countries default rates for CRE loans are higher than those for the stock of loans in other segments of the economy. Germany share of CRE NPLs is 30%, with a 10% exposure of total loans. | * In most countries default rates for CRE loans are higher than those for the stock of loans in other segments of the economy. Germany share of CRE NPLs is 30%, with a 10% exposure of total 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. | |||
* 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. | |||
* Looking at total exposures (investment in CRE and CRE loans) by investor type, banks have the highest exposure to CRE in most countries. | |||
==== Risk analysis ==== | |||
===== Collateral stretch ===== | |||
https://www.scopegroup.com/dam/jcr:e375322a-3fdf-4cbf-8e65-8a39cdd10763/Scope%20Ratings%20-%20European%20CMBS%20under%20pressure%20Mar%2021%202023.pdf | https://www.scopegroup.com/dam/jcr:e375322a-3fdf-4cbf-8e65-8a39cdd10763/Scope%20Ratings%20-%20European%20CMBS%20under%20pressure%20Mar%2021%202023.pdf | ||