Rising interest rates cost the global economy more than $1 trillion only in the office real estate market, said the head of Starwood Capital Group Barry Sternlicht, whose words are reported by Bloomberg. Investors did not want to sell objects at too low a price, as a result of which the number of real estate transactions in 2023 was the lowest in the past 10 years.
A high-profile case illustrating the downturn was the recent default of a luxury apartment complex in the heart of London's upscale Mayfair district, majority held by Chinese investment firms Citic Capital and Cindat. Rising interest rates have discouraged buyers from purchasing apartments costing up to £10.7m.
Now, supply in the global market has increased as local developers and landlords are forced to sell overseas properties acquired in previous years to pay off their debts and raise funds for domestic operations amid China's deepening real estate crisis. They even turn a blind eye to the unprofitable deals, with losses of up to 60% of the original value.