Fed harps on growing risk in US commercial real estate

Washington

FEDERAL Reserve officials do not see broad risks developing in US asset markets save for one: commercial real estate.

That concern was evident on Tuesday in the US central bank's semi-annual Monetary Policy Report to Congress, in which commercial property prices were singled out as a "growing concern" even as the Fed described wider risks to financial stability as "moderate". "Commercial real estate (CRE) valuations, which have been an area of growing concern over the past year, rose further, with property prices continuing to climb and capitalisation rates decreasing to historically low levels," said the report, which is prepared by Fed staff and delivered to Congress in tandem with Fed chief Janet Yellen's twice-yearly testimony to lawmakers.