Limited exposure of Portuguese banks to commercial real estate risk.

The European Central Bank (ECB) has expressed concern about the exposure of European banks to commercial real estate, which is in crisis due to rising interest rates and the widespread adoption of remote work.

In Portugal, banks are currently excluding the risks of potential consequences for financial stability. According to an official representative of the Portuguese Banking Association (APB), published in the Jornal de Negócios, the exposure of the Portuguese banking sector to commercial real estate is limited, and he refers to the latest Financial Stability Report from the Bank of Portugal (BdP). Furthermore, the regulator anticipates improvements in this market as uncertainty decreases.

Real estate consultants surveyed by the newspaper also rule out potential contagion effects and remain "moderately" optimistic for 2024.

Marta Lourenço, head of portfolio solutions and value and risk consulting at JLL, reminds us that "the non-performing loan crisis in Portugal peaked in 2015 and the following years, when a large portion of these types of assets was realized," and now banks are "much more demanding in terms of financing conditions." "Commercial real estate in Portugal has generally not been as overvalued as in other countries, so the risk of a significant price correction is also lower," adds Nuno Nunes, head of the capital markets area at CBRE, as quoted by the same publication. Source: Jornal de Negócios.