COVID-19 and the commercial real estate market in Ireland

Gerard Kennedy, Neill Killeen, Alexandros Skouralis, Sofia Velasco and Michael Wosser
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Gerard Kennedy: Central Bank of Ireland
Alexandros Skouralis: Central Bank of Ireland
Sofia Velasco: Central Bank of Ireland
Michael Wosser: Central Bank of Ireland

No 4/FS/21, Financial Stability Notes from Central Bank of Ireland

Abstract: This Note documents developments in the commercial real estate (CRE) market in Ireland since the onset of the COVID-19 shock as well as examining the factors determining the outlook. The CRE market is important to monitor from a financial stability perspective owing to its size and systemic interlinkages to both the real economy and the wider financial system. We show that the CRE market in Ireland has experienced a downward adjustment in valuations since the onset of the COVID-19 shock with the retail sector particularly affected. We highlight that components of the CRE market such as the retail and office sectors are particularly vulnerable to both near-term and structural implications of the COVID-19 shock such as the rise of online shopping and increased working from home practices. We combine a range of analytical approaches including forecast modelling techniques, the extension of the growth-at-risk framework to CRE and scenario analysis to assess the potential downside risks to the CRE market in Ireland.

Date: 2021-06
New Economics Papers: this item is included in nep-isf, nep-rmg and nep-ure
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