The growing role of investment funds in euro area real estate markets: risks and policy considerations

Pierce Daly, Lennart Dekker, O’Sullivan, Sean, Ellen Ryan and Michael Wedow

Macroprudential Bulletin, 2023, vol. 20

Abstract: This article analyses the financial stability risks of investment funds active in euro area commercial real estate (CRE) markets. It finds that real estate investment funds (REIFs) have grown significantly in the past decade, and have a large market footprint in several euro area countries where the outlook for CRE markets has deteriorated sharply. In addition, REIFs are exposed to liquidity risk when they offer frequent redemptions, which could affect the stability of CRE markets. REIFs should therefore be subject to a common and comprehensive policy framework to reduce the liquidity mismatch and risks to financial stability. JEL Classification: G23, R33

Keywords: commercial real estate; liquidity mismatch; policy framework; real estate investment funds (search for similar items in EconPapers)
Date: 2023-04
Note: 406092
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