The Impact of Commercial Real Estate on the Financial Sector, Its Tracking by Central Banks and Some Recommendations for the Macro-Financial Stability Policy of Central Banks

This article reviews the impact of commercial real estate (CRE hereafter) on macro-financial stability and gives some ideas, how central banks could deal with the risk. First, we present the main features of the CRE market, explain its cycle and outline risks related to this market. Its relation to the financial sector is discussed. Further on, basing on the experience of some countries with CRE crises, we critically assess the reactions of their central banks. The characteristics of the CRE market are presented on the case of Poland, because it is a fast growing market. Its analysis should simplify the understanding why the CRE market should be tracked by the central bank. Finally, we present some ideas for the data collection and analysis of the CRE market. Further on, we provide some hints for the macroeconomic and financial stability policy of central banks, which should help to reduce risk and at the same time enhance the growth of the CRE market