A sharp drop in commercial real estate is bleeding into the real economy.
Commercial property — from offices to shopping malls — is more sensitive to economic conditions than other asset classes, said Andreas Dombret, who served on the boards of Germany’s Bundesbank and the Bank for International Settlements, adding that “in the past, when the bubble did burst, very often this was related to commercial real estate.”
“But it’s ever so hard to ruin the party,” added Dombret. “This is why regulators often shy away from introducing countercyclical buffers at the right time: when there is no stress in the real estate market.”
Bloomberg Big Take 20 januari 2023