This week's plunge in shares of Swedish real estate giant Samhallsbyggnadsbolaget i Norden AB (SBB) may be just the beginning of Europe's commercial real estate crisis, as central banks’ interest rate hikes push up financing costs and investor concerns about developers' prospects intensify.
After S&P downgraded its credit rating to junk status on Monday due to concerns about liquidity, SBB fell nearly 20% in one day. It closed down more than 24% on Tuesday and fell further on Wednesday, closing down nearly 7.3%, falling to a nearly six-year low. Shares were down nearly 44% in the first three days of the week, before Thursday's big rebound. As of Thursday, the market value had shrunk from more than $17 billion at the end of 2021 to less than $1 billion.
Affected by the sharp drop in SBB, the real estate sector of the STOXX Europe 600 Index also fell for consecutive days.
Citigroup analyst Aaron Guy estimates that the value of commercial real estate assets in Western Europe could plummet by as much as 40%, which could lead real estate companies to violate the terms of real estate contracts.
Guy believes that the risk of housing contracts, and the situation of real estate companies seeking to refinance to reduce low-to-value (LTV) ratios, will require a "significant re-securitization" of the housing sector. This means that the stock has downside room in the short term, but perhaps presents an opportunity in the medium term.
More popular news:
BHP Says China's Real Estate Recovery Will Boost Metals Demand
Trafigura Sees Copper Prices Rising to All-Time High on China Economic Rebound and Supply Shortages
G7 to Expand Sanctions Covering Metals on Russia, Promises Further Support for Ukraine
A Bull Gold Market Has Just Begun
BofA Sharply Lowers Forecast for Oil Price, Global Oil Consumption in 2023
Copper Shortage Is Irreparable Even after Biggest Mergers and Acquisitions, Here’s Why
Testing Agency Responds to Great Wall Motor Report on BYD to Chinese Authorities
Goldman Sachs Lowers Price Forecast for Aluminium, Copper in 2023, Sees Nickel Price Plunging
'Bond King' Jeffrey Gundlach Says Sharp Fed Rate Cuts By Year-End Will Push Up Gold Prices
Zinc Prices to Plunge by 2025, Here's Why
US Treasury Bill Rates Soar to Record High on Debt Ceiling Jitters
![[SMM Analysis] Reshaping Cu Cons Trade Flows: China's New Raw Material Strategy Landscape Amid Geopolitical Chessboard](https://imgqn.smm.cn/usercenter/ieria20251217171709.jpg)