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COVID-19 and the commercial real estate market in Ireland

Author

Listed:
  • Kennedy, Gerard

    (Central Bank of Ireland)

  • Killeen, Neill

    (Central Bank of Ireland)

  • Skouralis, Alexandros

    (Central Bank of Ireland)

  • Velasco, Sofia

    (Central Bank of Ireland)

  • Wosser, Michael

    (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.

Suggested Citation

  • Kennedy, Gerard & Killeen, Neill & Skouralis, Alexandros & Velasco, Sofia & Wosser, Michael, 2021. "COVID-19 and the commercial real estate market in Ireland," Financial Stability Notes 4/FS/21, Central Bank of Ireland.
    • Handle: RePEc:cbi:fsnote:4/fs/21
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    File URL: https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/covid-19-and-the-commercial-real-estate-market-in-ireland.pdf?sfvrsn=8
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    Cited by:

    1. Hallissey, Niamh & Killeen, Neill & Wosser, Michael, 2022. "Identifying and assessing systemic risks in Ireland: a review of the Central Bank’s toolkit," Financial Stability Notes 16/FS/22, Central Bank of Ireland.

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