Top Stories
German commercial property prices post biggest-ever drop, data shows
Global Banking & Finance Review®
Company
By Tom Sims
FRANKFURT (Reuters) -German commercial property prices fell 12.1% in the final three months of 2023 compared with a year earlier in their biggest-ever drop, the VDP banking association said on Monday, as the nation’s struggling property industry suffers its worst crisis in decades.
For the full year, commercial real estate prices dropped 10.2%, accelerating their decline after small drops of less than one percent in 2022 and 2021, VDP’s data showed.
“A trend reversal is not yet in sight for property prices, despite frequent public speculation. The situation will remain difficult for the time being in 2024,” said VDP’s chief executive Jens Tolckmitt.
For years, property in Europe and particularly Germany boomed as interest rates fell, turbocharging demand. But a sudden jump in rates and building costs tipped some developers into insolvency as bank financing dried up and deals froze.
Germany is so far Europe’s hardest hit in a rout that has also struck China and the United States. Jobs are increasingly on the line, and the industry has called for emergency aid.
(Reporting by Tom SimsEditing by Miranda Murray)
Commercial property refers to real estate used for business purposes, such as offices, retail spaces, and warehouses. It is distinct from residential property, which is intended for living accommodations.
A financial crisis is a situation where the value of financial institutions or assets drops significantly, leading to a loss of confidence and potential economic downturn. It can result from various factors, including market crashes and excessive debt.
Interest rates are the cost of borrowing money, expressed as a percentage of the loan amount. They influence economic activity by affecting consumer spending and investment decisions.
A valuation in real estate is the process of determining the current worth of a property based on various factors, including market conditions, location, and property features.
Explore more articles in the Top Stories category
