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00:00 Since the Covid crisis, the world economies are trying to survive.
00:04 But after the Russian-Ukrainian war, geopolitical tensions and rising prices,
00:09 the fear of recession has begun to threaten the world's largest economies.
00:13 But it also seems that the real estate sector is creating a new crisis for the European economy,
00:19 as the European Central Bank warned that real estate companies in the euro area are facing
00:25 the highest losses since 2008, for several reasons, including financial losses,
00:31 the rise in debts, the decline in the value of real estate, and the weakening of rents.
00:36 And also the fear of the lack of energy in buildings.
00:40 Also, the largest European real estate companies have reached 10 times the average in debt.
00:46 This is close to the levels before the global financial crisis that occurred in 2008.
00:51 But these signs may bring a big negative scenario and lead to major losses in the financial system.
00:58 The number of transactions in the real estate sector in the euro area declined by 47% in the first half of 2023
01:07 compared to the first half of 2022.
01:10 The European Central Bank also expects that the share of tax loans for real estate borrowers in the euro area
01:17 will increase to a loss of 26% per 100.
01:22 Also, the interest on deposits in the euro area rose to 4.5% per 100
01:28 after it was 0.5% per 100 in July 2022,
01:32 after the European Central Bank raised the interest rates to 10 times the level of the inflation market
01:38 and the return of inflation to the target levels of 2% per 100.
01:43 The cost of financing the purchase and sale of real estate is 2.6% higher
01:48 compared to July 2022, before the European Central Bank started raising the interest rates
01:54 because the interest rates rose to 4.5% per 100.
01:59 The real estate sector accounts for 10% of the bank loans in the euro area.
02:04 This poses a risk of economic shocks to the financial system and financial companies.
02:09 But the European Central Bank's test in the middle of the year on European banks
02:16 showed that the banking sector can resist the severe economic collapse
02:22 in the event of a sudden economic crisis.
02:26 Also, expectations of a double share of bank loans for real estate companies
02:30 will increase to 26%, in addition to expectations of further deterioration of the debt levels in the sector.
02:36 This is what the European Central Bank benefited from in its latest expectations and statements,
02:40 but it warned that this could increase to half of all loans,
02:45 so the financing conditions continued to be more intense for two more years.
02:49 Moody's reduced the future valuation of 40% of European real estate companies
02:54 due to the deterioration of the debt-to-assets ratio.
02:57 The market value of real estate companies in the euro area has also decreased
03:02 by 110% from its original value of 70%.