According to major investors, the real estate crisis in Germany will continue this year. In a survey by the auditing and consulting firm EY, 92 percent of respondents agreed with the statement that further devaluations are expected in 2024.
At the same time, only a quarter of those surveyed expect the volume of real estate transactions to continue to decline in 2024. 45 percent expect a sideways movement, almost a third expect an increase. In 2023, the transaction volume for residential and commercial real estate more than halved to 29.3 billion euros – which corresponded to just under a quarter of the volume in the record year of 2021.
Lower loan interest rates give hope
“Signs of a bottoming out in the real estate investment market are slowly increasing. However, we have not yet overcome the crisis,” said EY study author Florian Schwalm. The price correction is not yet at the end and the bottom will probably not be reached until the end of the year. The recent fall in loan interest rates and the high demand for apartments, especially in cities, gave rise to hope.
The investors surveyed were still relatively optimistic about the housing market. At least for residential properties in good locations, they expect prices to rise (19 percent) or remain constant (46 percent) in 2024, and 35 percent expect discounts. For weaker locations, however, half of those surveyed expect prices to fall again and only 14 percent expect prices to rise.
In the battered market for office properties, the vast majority of investors surveyed expect prices to continue to fall. They also expect discounts predominantly in the retail and hotel segments in 2024. Around 250 real estate investors took part in the EY survey in November, including banks, project developers and funds.
