Real estate declined sharply in Europe during the second quarter of the year, as a result of increased pressure on liquidity and a decline in investment standards, which led to a decline in profitability. The “Will” report of default in Europe showed that the sector was affected by high interest rates and increasing debt servicing costs, in addition to weak demand for office space, which led to tightening pressures on the real estate market. The study collected data from more than 3,750 European companies listed on the stock exchange, and showed a difficult situation for the real estate sector.
According to a report carried by Bloomberg Agency, the rise in interest rates on the real estate sector is reducing the ability of individuals to afford housing costs, which lowers the expectations of house prices. The retail and FMCG sector witnessed another deterioration in the region, as the cost of living crisis negatively affected purchasing power.
In the same context, default levels in European financial services companies reached their highest levels since October 2020, due to the sharp collapse in market fundamentals in general.
The study showed that the increase in defaults may be the result of the recent collapse of the Silicon Valley Bank and the forced sale of the First Republic, raising legitimate concerns about the risk of crisis transmission. Reports indicate that the “state-backed bailout” of the sale of Credit Suisse to UBS has spooked investors, although risk reduction is now being attempted.
