Deflation and Real Estate prices

Business cycle, Inflation and Asset returns:

It is said that Deflation will reduce value of real estate assets financed with debt.

Why is this?

in delfation the value of debt increases (because the payments are fixed) so for an investor in real estate who will used at least some debt financing, repaying the debt will require an increasing amount of the return from the real estate investment, thereby reducing the net of debt repayment return.

Let’s assume you have an asset worht 100 mio financed with 33,3% of equity and 66,6% of debt and the asset goes down by 5% then your loss on equity is around 15%. (the nominal value of debt is the same 66,6 mio value, of asset 95 mio, so the value of equity changes from 33 mio to 28,4 mio around 15%.