European Central Bank: the commercial real estate market is approaching a more risky level.

The European Central Bank (ECB) has warned that the commercial real estate market across the EU nabiraetsa to the level of the boom, which is risky because of the growing shadow banking sector. According to him, the connection between the nonbank financial sector that is insufficiently regulated real estate market – gaining new potential risks.
The report says that in the European Union banking sector assets, which consist of investment funds and other financial institutions, at the end of 2018, marginally decreased to 41.9 trillion. Euro. At the same time, funds in Ireland increased by 0.3%.
Ireland is one of the six countries, which accounted for 85% of all investment Fund assets in the EU. The report highlights the growth in Ireland's so-called "funds of the cuckoos", which is largely supported by investors of the US and the UK and Russian investors.
Note that in the definition of "shadow banking sector" includes companies that are not banking institutions - the hedge funds, investment and brokerage companies, money market funds, as well as a number of other companies.
"Some non-Bank financial institutions remain vulnerable to re-evaluate the risks that may lead to additional complications in the funding of other financial sectors and the real economy", - stated in the ECB report.
This is most relevant to the field of real estate, where the "global bubble" and salable funding caused the recent financial crisis.
"On the commercial property markets of the EU, the volume of transactions and prices are approaching the previous peak of 2007," said the ECB.
The prospect of lower interest rates throughout the world has provoked a "hunt for yield" among investors. Currently, bonds worth about 13 trillion.Euro have a negative yield. In turn, countries such as Germany, produce them at rates below zero, and Ireland – close to zero. This led to the fact that investment funds are dealing with more risky debt. The market is "dangerous" loans with the involvement samna funds reached 1.2 trillion.Euro.
Given the situation that has developed, the European systemic risk Board (ESRB) expressed a warning because the ECB is preparing a new round of monetary stimulus, the consequence of which is the increase in property prices, what is happening in recent years. The difference with the "bubble" in the real estate market in two-thousand years - the last price spike was not the result of the boom in lending secured by real estate. This limited the impact on the banking sector, but also complicated the decision problem for the officials, because their instrumentation is mainly in the credit crunch.
It should be noted that the ESRB consists of the Central banks of the EU countries and major financial observers. It issues recommendations that are not binding.
According to the materials Independent.ie and Reuters