Latest news with #FRANKFURT
Yahoo
3 days ago
- Business
- Yahoo
European real estate stuck in 'zombieland' as recovery proves elusive
By Iain Withers, Tom Sims and John O'Donnell LONDON/FRANKFURT (Reuters) -Europe's commercial real estate market is defying expectations of a recovery as investor caution pins property sales to near-decade lows. Some investors and banks, recognising that the outlook remains weak, are even beginning to step in to offload or restructure distressed assets, one executive said, though they added that an "extend and pretend" approach to bad debts is still commonplace. It is a marked change in mood from the beginning of 2025 when there were hopes for an end to a three-year pandemic-induced downturn, but unpredictable U.S. trade policy, the promise of stronger returns in other private markets and a refusal by sellers to recognise lower prices have hit activity. Year-on-year commercial property sales in Europe were flat in the first quarter of 2025 at 47.8 billion euros ($55.6 billion), less than half the level of three years earlier, according to the latest revised MSCI data. Early indicators suggest a poor second quarter - cross-border investment into property in Europe, the Middle East and Africa fell about a fifth from a year earlier to 17.2 billion euros, the worst April-June period in a decade, property agency Knight Frank said, citing preliminary MSCI data. Sluggish sales have affected most sectors including hard-hit offices and even data centres, a previous bright spot, although the under-supplied rental housing market continues to attract interest. "We have 'zombieland' ... no recovery, stranded assets, no liquidity coming back," said Sebastiano Ferrante, head of European real estate at U.S. fund giant PGIM. While logistics and hotels also presented buying opportunities, out-of-town offices and old shopping malls are among assets struggling to find buyers, Ferrante added. Canada's Brookfield asked bondholders to approve the restructuring of a loan secured against its London CityPoint office tower in April, according to a regulatory filing, after shelving a sale when bids fell short of its expectations. In Germany, one of the country's most prominent property casualties - the Trianon skyscraper in Frankfurt - has been put up for sale by its administrator, Reuters reported last week, in a rare test of the fragile German market. There is also fierce competition for funds from other private markets such as credit. Private credit funds in Europe raised $39.9 billion in the first half of 2025, nearly double the $20.6 billion for real estate funds, according to Preqin data. However, both were on track to top their 2024 totals, with property already ahead of last year's poor tally. Survey data nonetheless points to ongoing caution. Investor sentiment towards European real estate fell to its lowest in over a year in June, according to trade body INREV, mirroring the U.S. market, where sentiment has also soured this year. "In some parts of the market the recovery is well under way... However there are out of favour assets and sectors where there is almost no liquidity and more pain to come," said Cecile Retaureau, head of private markets at the investment arm of insurer Phoenix. Germany, Europe's largest economy, has been particularly hard hit by the property slump, with sales down another 2% in the first half of this year, according to data from CBRE. "Transaction volumes will not jump. It will not kickstart in a very dynamic way," said Konstantin Kortmann, CEO of property agency JLL in Germany, who expects a gradual recovery. While still-high interest rates mean property investors have to be selective to make money, the prospect of international cash shifting to Europe from the volatile U.S. market could help, the property executives said. At least two of PGIM's German clients have cancelled planned property investments in the United States, reprioritising Europe and Asia, Ferrante said. ($1 = 0.8602 euros) Sign in to access your portfolio
CNA
4 days ago
- Business
- CNA
ECB supervisors focus on risks from tariffs to cyber attacks, central bank sources say
FRANKFURT/MADRID :European Central Bank supervisors are focusing on issues ranging from tariffs to cyber attacks and a possible dollar shortage as they assess potential risks to the region's banking industry, five senior central bank officials told Reuters. The ECB is looking into these risks amidst a global trade war and conflicts, such as the war in Ukraine. Chief ECB supervisor Claudia Buch said on Tuesday the central bank would test banks' resilience to geopolitical risk next year, telling them to come up with scenarios that had the potential to wipe out large chunks of their capital. In addition to this, ECB supervisors have been incorporating these risks into their regular checks for months, the sources, who asked to remain anonymous as details of the ECB's supervisory work are confidential, said. Banks have been told to watch their exposure to other countries, both via operations abroad and through credit to exporters, supervisors have told Reuters. Cyber attacks are also seen as a risk, particularly in Baltic countries, which have previously been the targets of Russian hackers, the sources said. The ECB has also told banks to prepare for a global dollar drought, for example if the Federal Reserve withdraws its lifelines, as Reuters reported earlier this year Supervisors are not telling banks to cut their exposures and they are not making specific recommendations at this stage, but rather urging banks to tighten their controls and think about contingency plans. The checks are taking place as part of the ECB's annual Supervisory Review and Evaluation Process and banks' own estimate of their liquidity needs, known in regulatory jargon as the Internal Liquidity Adequacy Assessment Process.
Reuters
5 days ago
- Business
- Reuters
ECB to test banks' resilience to geopolitical risk in 2026
FRANKFURT, July 15 (Reuters) - The European Central Bank will test banks' resilience to geopolitical risk next year, telling them to come up with scenarios that would wipe out large chunks of their capital, chief ECB supervisor Claudia Buch said on Tuesday. "In the 2026 thematic stress test exercise, we will follow up on this year's stress test by asking banks to assess which firm-specific geopolitical risk scenarios could severely impact their solvency," Buch told the European Parliament.
Reuters
5 days ago
- Business
- Reuters
Exclusive: Tariff threat complicates ECB's July decision but won't derail pause to rate cuts, sources say
FRANKFURT, July 14 (Reuters) - U.S. President Donald Trump's threatened 30% tariff on European Union imports is complicating the European Central Bank's decision-making but is unlikely to derail plans for a pause in rate cuts next week, five ECB policymakers told Reuters. The ECB signalled after its June meeting that it was likely to keep interest rates unchanged on July 23-24. But the 30% duty floated by Trump is steeper than the ECB had anticipated even under the most negative of three scenarios for the euro zone economy it released last month. That means the ECB has been forced to come up with new estimates and policymakers to contemplate a more negative outcome than they thought possible in June, said the five sources, all members of the ECB's Governing Council. They said governors remain reluctant to act on the basis of what is still a threat, however, especially given the sometimes contradictory statements made by Trump's administration since his first announcement of global tariffs in April. Any discussion about rate cuts is therefore likely to be kept for the ECB's September meeting, the sources said. Trump said on Sunday that his tariffs would kick in on August 1, and the European Commission has also paused its countermeasures until that date. Market economists have largely said they think it unlikely that Trump will follow through with his tariff threat because of the damage it would cause to the U.S. economy in terms of higher inflation and lower growth. But should the 30% levy be imposed, they expect the ECB to cut interest rates in response. Barclays analysts predicted a lowering of the ECB's deposit rate to just 1% by next March from 2% now if the U.S. imposes an average tariff rate on EU goods of 35%, which they estimated would subtract 0.7 percentage points from euro zone growth. The ECB's latest macroeconomic projections, released in June, pointed to a gradual recovery in the euro zone economy in coming years, with inflation hovering around its 2% target. Those projections assumed as their baseline a 10% tariff on EU good exports to the U.S., which would put euro zone economic growth at 0.9% this year, 1.1% next year and 1.3% in 2027. But forecasts under an alternative scenario released at the same time showed that a 20% U.S. tariff would curb growth by 1 percentage point over the same period and also pull down inflation to 1.8% in 2027, from 2.0% in the baseline scenario.
Reuters
12-07-2025
- Business
- Reuters
Thyssenkrupp steel, workers agree on site closures, less working hours in revamp
FRANKFURT, July 12 (Reuters) - Thyssenkrupp ( opens new tab and trade union IG Metall on Saturday said they had agreed on reduced working hours, lower bonus payments and site closures as part of a push to revamp Germany's largest steelmaker. The accord with steel workers marks a major step in Thyssenkrupp's restructuring, under which the former German industrial icon is planning to turn into a holding company, and comes after renewed tension between management and labour representatives. Implementation of the new collective bargaining agreement, which runs until September 30, 2030, must be approved by IG Metall members at Thyssenkrupp's steel unit TKSE and is pending an agreement on the division's future financing, they said. The agreement follows Thyssenkrupp's announcement that up to 11,000 jobs at the steel unit, TKSE, had to be cut or outsourced and that annual production capacity would be lowered to 8.7-9.0 million tons from 11.5 million tons. "We went to the pain threshold and only made concessions where it was really necessary in order to secure jobs and locations," said Tekin Nasikkol, head of Thyssenkrupp's works council and member of the group's supervisory board. "We have now created the conditions for the company to emerge from the difficult situation out of its own strength," Nasikkol said in a statement. Thyssenkrupp had wanted to reach a deal regarding the restructuring by summer and both sides aim to finalise the current agreement by the end of September. Reaching a wage deal has been seen as a key hurdle to be cleared before Thyssenkrupp can sell an additional 30% stake in TKSE to Czech billionaire Daniel Kretinsky, as planned. The investor already owns a 20% stake via a holding company.
