Earlier this week the Financial Times reported as follows: Property valuations are down about 10 per cent from their peak in June 2022, according to the MSCI European Quarterly Property Index. Citigroup forecasts that valuations in western Europe will drop by a further 20 to 40 per cent before the end of next year, while real estate stocks could halve in value over the same period
With OPEC cutting oil production and murmurs of looming crises in the shadow banking sector, a churn of non performing assets is expected in the medium term real estate cycle. As asset flip proliferates , there will need to be more efficient ways of transacting. Niche insurance products ( title to real estate, title to shares and W&I) are often introduced to shore up deals and strip out risks which are not carried by warranties in the SPA. The insurance industry often berated as the black sheep of financial services family sometimes does step up through innovation to neutralise crises. This was so during the last crisis and it will be so when those times are upon us again.