German real estate deals seen edging up, but close to decade lows

Jones Lang LaSalle Incorporated

17/12/2024 11:45

By Tom Sims
       FRANKFURT, Dec 17 (Reuters) - A key indicator of the
health of Germany's property sector likely improved in 2024 and
will make further gains next year, but will remain close to the
weakest levels in more than a decade, underscoring the sector's
struggles, forecasts on Tuesday showed.
    Global real estate firm Jones Lang LaSalle (JLL) predicted
that property transactions in Germany would rise to 35 billion
euros ($37 billion) in 2024 and increase further to between 40
billion and 42 billion euros in 2025.
    The forecasts, if they pan out, would mean that 2023 was a
low point in what has been a severe crisis in the industry in
Europe's largest economy. But they also reveal that any recovery
will be slow.
    "Despite the growth, the picture remains sobering," JLL
said.
    Economic weakness has resulted in companies abandoning or
postponing relocation and expansion plans, it said.
    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.
    Germany has been hardest hit in Europe's real estate-related
rout that has also struck China and the United States.
    Cuts in interest rates have since lent some support to the
market.
    Separate data on Tuesday pointed to ongoing weakness in the
German economy, with business morale worsening more than
expected in December, weighed down by companies' pessimistic
assessment of the coming months amid geopolitical uncertainty
and an industrial slump.
    ($1 = 0.9535 euros)

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Transaction volume in Germany's property market    https://reut.rs/4ghf1s1
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 (Reporting by Tom Sims
Editing by Mark Potter)
 ((Tom.Sims@thomsonreuters.com; +49 30 220 133 645;))