Falling interest rates will not prevent a rise in refinancing distress in Europe in the coming years – debt funding gaps will be large and forced selling will increase. However, financing pressures, on the whole, should be manageable. Our central forecast is therefore that a further crash in values can be avoided, but the recovery will be very weak. That said, a downside scenario with more widespread distress would risk larger price falls this year and next, with virtually no capital value recovery over the next five years.
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