The number of real estate transactions in Germany fell to the lowest level in 13 years

What happened? The number of commercial property transactions in Germany fell to a 13-year low in the first quarter of 2023.

Аccording to a report provided by BNP Paribas Real Estate, transaction volumes between January and March were €5.1 billion euros ($5.6 billion), less than half the historic average and the lowest level since 2010. Residential property transactions have also dropped significantly, they added.

Context. Germany's real estate sector has been hit hard by the rapid interest rate increases from the European Central Bank last year, causing the cost of financing to skyrocket.

This has created a price mismatch in the property market, with potential sellers claiming that rapid inflation will continue to increase rental income and thus support property values, while interested buyers point to financial costs to justify their lower price demands.

So what? According to BNP Paribas Real Estate Germany head Marcus Zorn, the German real estate investment market is in a very challenging phase, which is a logical consequence of the high uncertainty on the real estate market.

Source: Bloomberg

Photo by Chi Nguyen Phung on Unsplash

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