German commercial property prices drop but show some stabilisation
GERMAN commercial property prices fell 7.4 per cent in the second quarter from a year earlier but showed signs of stabilisation, the VDP banking association said on Monday (Aug 12), as the country’s real estate sector grapples with its worst crisis in decades.
Commercial real estate valuations, in decline for two years, rose 0.4 per cent from the first three months of this year, suggesting that the market was “calming down”, VDP said.
However, prices are likely to move sideways in the coming quarters, and further setbacks are possible given a weak economy and the low volume of transactions in the sector.
“The situation in the commercial property market remains tense,” VDP’s chief executive Jens Tolckmitt said.
For years, property in Europe and particularly Germany boomed as interest rates fell, spurring demand. But a sudden jump in interest rates and building costs tipped some developers into insolvency as bank financing dried up and deals froze.
Germany has so far been Europe’s hardest hit in a real estate-related rout that has also struck China and the US.
A NEWSLETTER FOR YOU
Tuesday, 12 pm
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Later this year, German Chancellor Olaf Scholz is launching a fresh bid to tackle the crisis at a meeting of politicians, ministries and industry representatives.
In recent weeks, two of Germany’s largest landlords, Vonovia and LEG Immobilien, reported losses after revaluing their holdings.
Deutsche Bank, Germany’s largest lender, last month said the sector remains under pressure.
German property lender Aareal, which has a big footprint in the US, last week disclosed a 26 per cent increase in loans for offices that were likely to go unpaid during the second quarter. REUTERS
Share with us your feedback on BT's products and services
