Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/310370 
Year of Publication: 
2023
Series/Report no.: 
Staff Memo No. 11/2023
Publisher: 
Norges Bank, Oslo
Abstract: 
Norwegian banks have substantial exposures to commercial real estate (CRE), and developments in the industry are important for financial stability. Higher financing costs, falling CRE prices and a large amount of bond debt maturing in the coming years have increased the refinancing risk associated with CRE over the past year. We use a broad set of data sources to assess CRE firms' refinancing risk and their capacity to absorb higher financing costs. The strong growth in CRE firms' bond debt over the past decade has contributed to spreading risk from banks to other financial operators. At the same time, bond debt can be a less stable funding source than bank debt in turbulent times. We find that banks have modest exposures to CRE groups with elevated refinancing risk in the bond market and those with the weakest financial strength. The rapid rise in rents over the past few years and CPI-indexing of office leases make many CRE firms robust against higher interest rates and credit premiums. In the event of an economic downturn, however, developments in renteal income may fall.
Subjects: 
Financial stability
commercial real estate (CRE)
banks' credit risk
Persistent Identifier of the first edition: 
ISBN: 
978-82-8379-279-9
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Research Report
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.