INVESTOR appetite for German real estate deals remained muted at the start of the year, according to Jones Lang Lasalle, even as some valuations look to be bottoming out and interest-rate cuts edge closer.

The number of transactions dropped 19 per cent in the first quarter compared with a year earlier, the broker said on Monday (Apr 8). The total, 6.3 billion euros (S$9.2 billion), was the weakest for the period since 2011.

Sellers are having a particularly hard time finding buyers for larger portfolios, with deals down 50 per cent in this segment.

On top of higher financing costs, slower economic growth and sluggish return-to-office trends are weighing on commercial real estate transactions.

JLL said there’s likely to be a significant increase in the number of properties that fall into restructuring, noting older buildings that need updating, as well as those where deals need refinancing.

Even as inflation slows and central banks signal that rate cuts may start later this year, German real estate deals will likely remain subdued, JLL said. While it sees deals picking up through the rest of 2024, its full-year prediction for around 40 billion euros in total would still be well below the numbers seen in record years. BLOOMBERG

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up