Sweden has not adapted to the increased policy rates – the real estate industry is fighting for its life. These are the conclusions of a night-black analysis that was presented in the business news agency Bloomberg’s article on Tuesday.
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Bloomberg’s warning
And with large investments in the real estate industry either as shares or loans, banks and credit unions have many reasons to worry about the coming future.
The Financial Supervisory Authority Henrik Braconier leads banking supervision at the Financial Supervisory Authority, FI and believes that the worst credit effects have not surfaced yet:
“We still haven’t seen the full impact of interest rate hikes on real estate companies’ funding costs because all the debt hasn’t been rolled over yet,” Henrik Braconier told Bloomberg.
Credit losses of many billions
However, the Swedish banks’ large credit losses in the style of those that hit, for example, Credit Suisse and the American niche banks such as Silicon Valley Bank last year are still pending.
But the clouds of worry are piling up. The real estate company Balder has reported a loss of billions.
Heimstaden, which lost a lot of money last year, is now being investigated by the Financial Supervisory Authority. In addition, the Swedish Pensions Authority wants to review its criticized investments in the crisis-ridden real estate company.
Request in bankruptcy
Earlier this week, Oscar Properties was also filed for bankruptcy after the Norwegian Crown Prosecutor said the company had no assets to measure.
Financial earthquake when the real estate giant is filed for bankruptcy
The pension company Alecta, which manages Sweden’s occupational pensions for civil servants, has received a lot of criticism for having invested large sums of money in high-risk companies in the USA, and lost up to SEK 20 billion in Silicon Valley Bank.
Late report – a bad sign
Now the report for the company’s full-year results is delayed, due to the fact that Heimstaden, in which Alecta has invested a lot of money, must be revalued. If the value is written down – which is likely – it will mean further setbacks for pension savers.
The company’s credit rating has been downgraded recently, reported Real estate news at the beginning of February.
Credits in danger – Sweden in danger
Bloomberg’s warning for the Swedish real estate market is also a warning that applies to credit companies and banks. The big real estate companies are not the most relaxed. Nor individual condominium owners or condominium associations.
But small owners with commercial properties that fall somewhere in between in the size order are the ones to keep an eye on: They often depend on loans from the banks rather than other credit companies, and don’t get as much attention as the big companies.
Glides under the radar
This allows their potential weaknesses to slip under the radar and be missed by the market.
– These are the companies that banks have provided with the largest loans and that we see as the biggest risk group for credit losses, Braconier tells Bloomberg.
Due to the struggle to bring down the mountain of debt, it will probably get worse before it gets better on the Swedish real estate market, writes the news agency.
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