The International Monetary Fund (IMF) estimates the direct exposure

 

The International Monetary Fund (IMF) estimates the direct exposure of European bank loans to commercial real estate is, on average, around 6%, compared to 17% in the U.S.  Barclays believes Nordic and German banks could be pockets of weakness if systemic risks emerge.  In a recent IMF financial stability report, IMF pointed to growing concerns about the commercial real estate industry, given its dependence on smaller banks.  According to Capital Economics chief property economist Andrew Burrell, there may be patches of property-related vulnerability in Europe's financial system.  Analysts believe refinancing properties will worsen with tighter bank financing conditions and higher interest rates.  Another concern, according to the ECB, is possible redemptions from REITs that constituted around 40% of Europe's CRE market in 2022.