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2024/03/18 / Erste Group Research

Real Estate EUR Corporate Bond Market: Will the recovery come in 2024?

The market for EUR real estate corporate bonds has grown strongly in recent years. After peaking in 2021, the primary market has been overshadowed over the last two years by the war in Ukraine and the ECB's restrictive monetary policy. In our opinion, access to the capital market for real estate companies is likely to remain tight in 2024 due to the economic slowdown.

The momentum of ESG placements remains on the rise. Green bonds are the most common form within the ESG categories.

However, if sentiment brightens, the investment grade real estate sector offers potential compared to non-financial sectors. However, it remains to be seen whether 2024 will see the start of a recovery in the real estate sector. Many challenges still remain.

The still relatively high (re)financing costs pose the greatest risk to the credit quality of real estate issuers in the next 12-18 months, as the high interest rate level is not yet fully reflected in property valuations. Issuers' interest coverage ratios will remain under pressure and debt levels are likely to rise. However, the still relatively low refinancing requirements of real estate issuers in 2024 remain supportive.

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General information

AuthorErste Group Research
Product nameCredit News
Topic in focusCredits/ Corporate bonds
Economy in focusAustria
Currency in focusEuro
Sector in focus-