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| 1 minute read

Happy New (Real Estate) Year 2024!

The depressed situation on the German real estate market has been exacerbated in recent weeks by the insolvency of a number of developers. On the one hand, investors were reluctant to buy because interest rates were too high and purchase prices had not yet fallen enough, i.e. pricing had not yet been finalised. On the other hand, there were few lucrative opportunities for potential buyers. Compared with the previous year, transaction volumes were down by more than 50%. Despite the EUR 1 billion transaction for a supermarket portfolio, the market in 2023 was dominated by smaller transactions of up to EUR 70 million.

In particular, the office asset class experienced a sharp decline. Its share fell to less than 20%, while residential was the strongest asset class in 2023 at around 30%. Purchases by foreign investors also fell by around 10% in 2023.

Inflation and the war in Ukraine are still seen as the two main factors behind the tensions on the (not only German) real estate market, but the gas crisis and the fundamental supply chain problem should not be neglected either. However, the European and German interest rate policies are also seen as having a particularly negative impact. The rapid rise in interest rates has triggered a downward spiral that has also dragged down the real estate business, which has flourished for years and knows few limits. Experts believe that the situation will only improve slowly in the medium term, especially because of the great uncertainty in the real estate sector, which has been spoiled by the success of recent years.

Everyone is now waiting - assuming one can afford it - for the first BIG MOVER, which, despite higher interest rates and still high purchase prices, will herald the "new normal" in the property market with the first major transaction.

Although interest rates are not expected to fall for the time being, the real estate market is expected to help itself in the course of 2024. So there is light at the end of a long, dark tunnel.

Although there are obstacles ahead, 2024 offers commercial real estate investors several opportunities.


real estate, 2024, trends, bring it on