2024-04-07 06:07:06
Across Europe, the crisis on the commercial real estate market is reflected in higher risks and increases in loans at risk of default – including in Austria. According to current data from the European Banking Authority (EBA), the volume of loans at risk of default in the commercial real estate industry at domestic banks increased to EUR 3.2 billion in December 2023, from EUR 2.3 billion in September 2023.
The non-performing loan (NPL) ratio in the sector also increased from 3.4 percent to 4.6 percent. At the end of the fourth quarter, Austria was above the EU average of 4.3 percent. The neighboring country of Germany is also severely affected, where the volume of loans at risk of default for commercial real estate increased from 9.7 billion to 13.6 billion euros from the end of September to the end of December 2023. The “Handelsblatt” had previously reported on the data.
In an EU comparison, Austria or Germany do not have the greatest default risks for loans in the commercial real estate sector. For example, the NPL ratios (as of December 2023) in Spain and Italy are significantly higher at 6.6 and 6.5 percent, respectively, although both countries show a declining trend in the ratios compared to September 2023.
The EBA has been on alert for some time due to falling prices on the commercial real estate market and the resulting increasing risks in the banking sector. Because of low interest rates, billions have flowed into the industry in recent years, but with the sharp rise in interest rates and the increasing trend towards home offices in the wake of the corona pandemic, prices have now come under severe pressure. In Austria, the insolvencies in the Signa Group have also caused turbulence in the sector.
Commercial real estate is currently “among the biggest risks for the banking sector,” said EBA boss José Manuel Campa to “Handelsblatt” just a few weeks ago. The situation is particularly serious in the USA. Campa sees “greater challenges” for banks that specialize in commercial real estate, but he does not fear systemic dangers for the entire banking system.
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