Commercial real estate prices are still expected to crater, Morgan Stanley warns
Prepare for pain in the #us #commercial #realestate market warns Morgan Stanley which believes that prices could drop by as much as 27.4% from peak to trough by the end of 2024. And McKinsey believes prices could slide by as much as 42% in a worst case scenario. Source: barchart
The housing bubble continues to lose more air in Germany
The housing bubble continues to lose more air in Germany. In June, real estate prices slumped sharply, w/existing homes in particular falling by 2.4% MoM. Even new buildings became somewhat cheaper, namely 0.4%. Source: Bloomberg, HolgerZ
The US Housing Market Index rose for the 6th consecutive month, moving above 50 for the first time since last July.
Homebuilder confidence increasing due to extremely low levels of existing inventory (new homes representing a larger share of overall supply). Source: Charlie Bilello
Chinese real estate bonds are negative again in 2023!
Chinese real estate bonds have turned negative since the beginning of the year, erasing its big rally earlier this year. Investor sentiment has been dampened since the collapse of one of the only offshore 2023 new issues (Wanda Group / -30pts), doubts about the ability of SOEs to meet their obligations (Sino-Ocean / -46pts) and as restructuring plans seem to be a very long way to return on investment. Yet the (modest) recovery appears to be taking hold, with new home prices and home sales rising for the second consecutive month in March and the sector growing yoy in the Q12023, after six quarters of contraction. Source: Bloomberg
Real estate debts in Europe have the most concerns!
One of the main consequences of the sharp rise in interest rates is the level of damage it could have on the real estate sector. The European high yield market is already anticipating complicated months for the real estate sector with a cumulated default probability of 8% over the next two years , the highest of all sectors. Is the worst to come? Source: Bloomberg.
London office deals slumped to lowest for 20 years
Almost no one was buying office space in the capital in the final quarter of 2022. Less than £400 million of offices were bought and sold, an 88% drop from the prior quarter, according to CoStar. That’s worse than the decline during the financial crisis or Covid lockdowns. Source: Bloomberg
The housing boom is finally over in Germany
The housing boom is finally over in Germany as prices for residential properties drop for the first time since GFC in 2009. Europace German House Price Index dropped 0.8% in 2022 w/existing homes down 6%. Source: Bloomberg, HolgerZ
First USD-denominated bond issued by a Chinese property developer since September 2021!
New positive sign for the Chinese real estate sector? After 16 months of waiting, the dollar-denominated debt market has reopened for a Chinese property developer, Wanda Properties, without any guarantee from the Chinese government. This new issue was well received by investors as the book was oversubscribed four times. However, the majority of investors were from Asia (>80%) and while this news is positive for the sector (and its liquidity problem), it does not solve the problem of sales (demand) for now. Source : Bloomberg
