FT News Briefing Is commercial property the ‘next shoe to drop’?
4 snips
May 9, 2023 The Bank of England is poised to raise interest rates to their highest since 2008, sparking concerns over U.S. commercial real estate vulnerabilities. Investors are wary of potential crises as property values tumble and refinancing becomes tougher for developers. Meanwhile, Chinese investments in Europe are decreasing, hampered by stricter regulations despite some growth in electric vehicle projects. The combination of these factors is stirring debate among analysts about the future of these markets.
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Interest Rate Hike
- The Bank of England is expected to raise interest rates for the 12th consecutive time to combat high inflation.
- Economists predict a quarter-point rise to 4.5%, the highest since 2008.
Chinese Investment Decline
- Chinese investment in Europe dropped to its lowest in nearly a decade in 2022.
- Increased regulatory scrutiny halted or deterred many deals, especially in tech and infrastructure.
Impact of Regulations
- Europe's stricter regulations have significantly slowed Chinese mergers and acquisitions.
- However, greenfield investments, particularly in electric vehicle and battery production, remain strong.