Frankfurt, February 10 – In 2024, German commercial property prices dropped by 5.4%, marking the fourth consecutive year of declines. The VDP banking association noted some signs of stabilization as the country’s real estate sector deals with its most severe crisis in decades.
This decline was less severe than the 10.2% drop experienced in 2023. Notably, prices rose by 0.5% in the fourth quarter of the previous year, indicating their first quarterly increase since the first half of 2022.
For several years, the property market in Europe, especially in Germany, thrived due to falling interest rates that increased demand. However, a sudden rise in interest rates and building costs caused financial strain, leading some developers to face insolvency as access to bank financing diminished and transactions stalled.
The market shows gradual improvement as the European Central Bank lowers rates. However, VDP expressed caution regarding the future outlook due to the overall weakness of the economy.
VDP Chief Executive Jens Tolckmitt stated, “A reliable assessment of future price development is fraught with great uncertainty.”
Germany has experienced the most significant impact in this property-related downturn, which has also affected markets in China and the United States.
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