5.3.5 Real Estate risk

5.3 Market risks

L1-121. The Real Estate risk charge is calculated as the change in the net asset value, following the occurrence of a prescribed stress scenario, based on a change in the level of real estate prices, after management actions, as specified in the Level 2 text.
L1-122. The Real Estate risk stress scenario is applied to both direct and indirect exposures to real estate prices, without distinguishing between commercial, residential and real estate for own use (see section 1.3 on look-through), as specified in the Level 2 text.
L2-229. The stress scenario referred to in the Level 1 text is a decrease of 25% in real estate prices. Assets and liabilities subject to the stress are:
- a. Commercial investment real estate;
- b. Residential investment real estate;
- c. Real estate for own use;
- d. Other assets whose value is impacted by a change in real estate prices; and
- e. Liabilities, both insurance and other, whose value is impacted by a change in real estate prices.