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Business and Economics > Real Estate

You are looking at 1 - 10 of 55 items for :

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Cover Global Financial Stability Notes
Commercial Real Estate Prices During COVID-19: What is Driving the Divergence?
Andrea Deghi, Mr. Fabio M Natalucci, and Mahvash S Qureshi
After dropping sharply in the early phases of the COVID-19 pandemic, commercial real estate prices are on the mend. However, the initial price decline, as well as the pace of recovery, vary widely across regions and different segments of the commercial real estate market. This note analyzes the factors that explain this divergence using city-level data from major advanced and emerging market economies. The findings show that pandemic-specific factors such as the stringency of containment measures and the spread of the virus are strongly associated with a decline in prices, while fiscal support and easy financial conditions maintained by central banks have helped to cushion the shock. A higher vaccination rate has aided the recovery of the sector, especially in the retail segment. Structural changes in private behavior such as the trend toward teleworking and e-commerce have also had an impact on commercial property prices in some segments. The outlook of the sector across regions thus remains closely tied to the trajectory of the pandemic and broader macroeconomic recovery, financial market conditions, and the pace of structural shifts in the demand for specific property types. In an environment of tightening financial conditions and a slowdown in economic activity, continued vigilance is warranted on the part of financial supervisors to minimize financial stability risks stemming from potential adverse shocks to the sector.
Keywords:
commercial real estate; COVID-19; pandemic; commercial property; vaccination; real estate prices; price divergence; shut-downs; e-commerce; work from home; price decline; CRE price; vaccination rate; recovery of the sector; price growth; Land prices; North America; Global
Cover IMF Working Papers
Commercial Real Estate and Macrofinancial Stability During COVID-19
Andrea Deghi, Mr. Junghwan Mok, and Tomohiro Tsuruga
The COVID-19 pandemic crisis has severely shocked the commercial real estate (CRE) sector, which could have important implications for macro-financial stability going forward because of the large size of the sector and its strong interconnectedness with the real economy. Using a novel methodology, this paper quantifies vulnerabilities in the CRE sector and analyzes policy tools available to mitigate related risks. The analysis shows that CRE prices were overvalued in several major advanced economies in 2020:Q1. It also shows that such price misalignments increase the likelihood of future price corrections and exacerbate downside risks to future GDP growth. While the path of recovery in the sector will depend inherently on the pace of overall economic recovery and the structural shifts induced by the pandemic, easy financial conditions may contribute to an increase in financial vulnerabilities and persistent price misalignment. Macroprudential policy can, however, be effective in curbing the financial stability risks posed by the CRE sector.
Keywords:
Commercial Real Estate; Asset Prices; Growth-at-Risk; Panel Quantile Regression; Macroprudential Policy; price misalignment; CRE sector; data description; CRE valuation; price correction; COVID-19; Real estate prices; Global financial crisis of 2008-2009; Financial sector risk; Global
Cover IMF Staff Country Reports
Switzerland: Selected Issues
International Monetary Fund. European Dept.
Selected Issues
Keywords:
D. policy implication; policies equity; liquidity gap; liquidity shortfall; solvency risk; Housing prices; Foreign assets; Pension spending; Retirement; Global financial crisis of 2008-2009; Global; Europe
Cover IMF Working Papers
Financial Cycles – Early Warning Indicators of Banking Crises?
Ms. Sally Chen and Katsiaryna Svirydzenka
Can the upturns and downturns in financial variables serve as early warning indicators of banking crises? Using data from 59 advanced and emerging economies, we show that financial overheating can be detected in real time. Equity prices and output gap are the best leading indicators in advanced markets; in emerging markets, these are equity and property prices and credit gap. Moreover, aggregating this information flags financial crisis many years before the crisis. Lastly, we find that the length of financial cycles is of medium-term frequency, calling into question the longer frequency widely used in the estimation of countercyclical capital buffers.
Keywords:
equity price cycle; property price cycle; banking crisis; BIS-definition credit cycle; C. cycle property; Financial cycles; Banking crises; Credit; Land prices; Business cycles; Global
Cover IMF Staff Country Reports
France: Financial Sector Assessment Program-Technical Note-Nonfinancial Corporations and Households Vulnerabilities
International Monetary Fund. Monetary and Capital Markets Department
This technical note on nonfinancial corporations and households vulnerabilities on France analyzes the structure of nonfinancial corporate financing in the French economy, potential vulnerabilities of the corporate sector, and their possible channels of transmission through interconnections with the financial system. The objective of this paper is to document the evolution of French corporate debt since the global financial crisis, analyze the riskiness of this debt, the quality of allocation of this debt, and uncover potential heterogeneity across sectors and firms which may have implications at the macroeconomic level. This paper also complements existing studies by the Institut National de la Statistique et des Études Économiques, the Haut Conseil de Stabilité Financière and the Banque de France by undertaking a cross-country comparative analysis. Empirical analysis suggests that corporate debt may be allocated efficiently across publicly listed companies, but the picture is less clear among nonpublicly listed firms.
Keywords:
ISCR; CR; financial crisis; real GDP; bank credit; return on assets; financial condition; housing loan; interest rate; household debt; debt financing; Loans; Housing; Housing prices; Global financial crisis of 2008-2009; Financial statements; Global
Cover IMF Working Papers
Conceptual Issues in Calibrating the Basel III Countercyclical Capital Buffer
Torsten Wezel
This paper discusses issues in calibrating the countercyclical capital buffer (CCB) based on a sample of EU countries. It argues that the main indicator for buffer decisions under the Basel III framework, the credit-to-GDP gap, does not always work best in terms of covering bank loan losses that go beyond what could be expected from economic downturns. Instead, in the case of countries with short financial cycles and/or low financial deepening such as transition and developing economies, the Basel gap is shown to work best when computed with a low, smoothing factor and adjusted for the degree of financial deepening. The paper also analyzes issues in calibrating an appropriate size of the CCB and, using a loss function approach, points to a tradeoff between stability of the buffer size and cost efficiency considerations.
Keywords:
WP; BCBS gap definition; Basel gap specification; BCBS buffer guide; Macroprudential Policy; Procyclicality; Basel III; credit-to-GDP gap; BCBS calibration; loan loss; credit-to-GDP ratio; Credit gaps; Financial cycles; Housing prices; Credit; Global; Central and Eastern Europe; Eastern Europe
Cover IMF Working Papers
House Price Synchronicity, Banking Integration, and Global Financial Conditions
Mr. Adrian Alter and Jane Dokko
We examine the relationship between house price synchronicity and global financial conditions across 40 countries and about 70 cities over the past three decades. The role played by cross-border banking flows in residential property markets is examined as well. Looser global financial conditions are associated with greater house price synchronicity, even after controlling for bilateral financial integration. Moreover, we find that synchronicity across major cities may differ from that of their respective countries’, perhaps due to the influence of global investors on local house price dynamics. Policy choices such as macroprudential tools and exchange rate flexibility appear to be relevant for mitigating the sensitivity of domestic housing markets to the rest of the world.
Keywords:
WP; house price synchronicity; gap synchronicity; synchronicity measure; house price growth; equity price return; price gap synchronicity; Housing market; global liquidity; financial conditions; banking intergration; business cycles; gaps of country; cycle synchronicity; house price synchronicity measure; Housing prices; Exchange rate arrangements; International liquidity; Global financial crisis of 2008-2009; Global
Cover IMF Working Papers