The Sectoral Systemic Risk Buffer for Commercial Real Estate Finance

The Financial Market Authority will gradually raise the sectoral systemic risk buffer for commercial property finance to 3.5 percent by 2027. This Research Brief assesses the macroeconomic implications of this measure against the backdrop of the macroprudential tightening measures being implemented simultaneously and the absence of systematic signs of cyclical overheating. Microprudential requirements tailored to specific credit institutions would currently be more targeted and proportionate than a sectoral systemic risk buffer with a blanket effect. Since commercial real estate loans also include loans to commercial housing developers, macroprudential policy is dampening an already fragile construction sector, driving up rents, and reinforcing the European Central Bank's shift in interest rate policy.