Commercial real estate crisis: The banking sector at risk

Commercial real estate crisis: banks in the red

In an interview with Handelsblatt, relayed by L'Echo, José Manuel Campa, Chairman of the European Banking Authority (EBA), underlined the major risks that commercial real estate represents for banks. The crisis, exacerbated by the rise in teleworking during the pandemic, has led to a fall in office prices of up to 30%. Eric Dor, Director of Economic Studies at the IESEG School of Management, confirms that this decline is putting significant pressure on property companies.

Banking risks related to commercial real estate

Eric Dor points out that the banks most affected are those specializing in commercial real estate, but he believes that a generalized banking crisis is unlikely. In Belgium, the level of subprime lending remains relatively low, in contrast to countries such as Romania, Greece and the Czech Republic, where subprime lending represents a significant proportion. The EBA Chairman warns of a prolonged crisis in the commercial real estate sector, calling on banks to prepare for long-term challenges.