Torsten Hollstein, Managing Director of CR Investment Management, comments on the ECB’s interest rate hike
“The interest rate hike exacerbates the already tense situation in the real estate industry. Higher financing costs meet significantly lower real estate values. This reduces the possible debt capital shares and creates additional equity requirements. Especially in the case of upcoming refinancing, the negotiations between owners and investors will become even more challenging.
However, it is important to look beyond the current interest rate decision. The industry must be prepared for the fact that the higher interest rate level is not a temporary phenomenon. Anyone who relies on interest rates falling significantly again in a few quarters is taking a considerable risk. Historically, today’s interest rate level is by no means high. Rather, the long phase of extremely low and sometimes negative interest rates was extraordinary. This reality must now also be reflected in valuations, financing structures and business plans.”
