[ad_1]
Dublin: Irelandtwo major banks of AIB Group And bank of irelandexpect commercial Real estate values will fall this year, but said this week the conservative underwriting in their lending to the sector would make any revaluation manageable.
The shift to home working has put pressure on the Irish office market, which has experienced a boom in recent years thanks in large part to high levels of investment from multinational tech firms, some of whom are now expanding their hiring practices including letting people go. areas are being cut.
Ireland’s biggest life insurer Irish Life, a unit of Canada’s Great-West Lifeco Inc, on Monday introduced a six-month notice period for withdrawal requests from a 500-million-euro ($526.95-million) estate fund. of customer withdrawals, citing an increase in the level of
Colin Hunt, chief executive of the country’s biggest mortgage lender AIB, said on Thursday the commercial property market was facing a challenging period due to a slump in office demand and the consequences of high interest rates.
“From our perspective, we consider what the merits of the underwriting are and the quality of that underwriting is really strong with loan-to-value (LTV) ratios in the order of 60% at the beginning of the facilities,” Hunt told RTÉ. The latter said the bank reported a jump in profits and shareholder returns.
“So certainly I think a valuation challenge may well be ahead for this sector, but I don’t expect material loss due to that.”
The country’s biggest lender by assets, Bank of Ireland, sees commercial real estate (CRE) prices falling by 6% in 2023 and 2.5% in 2024, based on its updated financial targets published on Tuesday.
Donal Galvin, head of AIB Finance, told Reuters on Wednesday he expects prices to fall by up to 10% this year.
Bank of Ireland chief executive Miles O’Grady described CRE as “an area of some concern” for the system, but the average LTV for its office book was 55%.
The exit of KBC and NatWest Group from the Irish market has left AIB and Bank of Ireland as the main banks lending to the sector.
Although a decade ago when a sharp drop in CRE prices contributed to the banking collapse, funds investing in assets are now a major participant in Ireland, accounting for about 35% of the investable market, according to the country’s central bank. Let’s keep
The regulator last year introduced a new leverage limit for asset funds to address the risks arising out of that rapid expansion. ($1 = 0.9489 euro) (Reporting by Padraic Halpin; Editing by Shaunak Dasgupta)
[ad_2]
Source link