Insurers globally have a 9-12% stake in the commercial real estate (CRE) market through various investments such as mortgages, bonds, and direct real estate ownership, as reported by Gallagher. In both the U.S. and Europe, insurance companies are significant investors in CRE, allocating around 12% and 7% of their investment portfolios to this sector, respectively. Concerns have arisen within the life insurance industry regarding a potential recession, particularly one driven by commercial real estate.
The impact of COVID-19 and the shift towards remote work has led to a notable increase in available downtown commercial real estate space, with this trend showing no signs of slowing down. Despite some economic stagnation in the U.S. and EU, recessionary pressures remain low, while China continues to exhibit strength, albeit with slower growth compared to previous years.
Banks have been actively increasing their investments and extending credit lines for commercial real estate, contributing to the sector’s resilience during challenging times. This continued support from financial institutions has played a key role in sustaining the CRE market.