FRANKFURT (Reuters) -German commercial property prices fell 5.4% in 2024, a fourth consecutive year of declines, but showed some signs of stabilisation, the VDP banking association said on Monday, as the country’s real estate sector tries to shake off its worst crisis in decades.
The drop was smaller than the 10.2% fall in 2023 after prices rose 0.5% in the fourth quarter of last year – their first quarterly increase since the first half of 2022.
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.
The market is gradually improving as the European Central Bank cuts rates, but VDP was cautious about the outlook given the economy’s weakness.
“A reliable assessment of future price development is fraught with great uncertainty,” said VDP Chief Executive Jens Tolckmitt.
Germany has been Europe’s hardest hit in a real estate-related rout that has also struck China and the United States.
(Reporting by Tom Sims, Editing by Miranda Murray)
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