Germany's real estate market is facing its worst crisis in decades and foreign investors appear to be losing interest.
The share of foreign buyers of commercial property fell to 35% in the first months of 2024. This is the lowest level since 2013, according to consultancy BNP Paribas Real Estate.
The drop in investment coincides with a 70% drop in sales volumes from their peak in 2020-2021.
The German economy, once the powerhouse of Europe, is now struggling with a number of problems. In the first place is the rejection of Russian energy. Germany is trying to get rid of its dependence on Russian gas, which is causing energy prices to rise.
In second place is the bureaucracy. It definitely interferes with doing business and implementing projects.
The rise of right-wing sentiment is also a stumbling block in the property sector. The strengthening of the positions of far-right parties in public opinion polls is causing concern among investors.
All these factors, combined with rising interest rates from the European Central Bank, led to a sharp cooling of the real estate market. Commercial property prices have already fallen by 20% in the last 12 months and the outlook for the future is bleak.
Big entrepreneurs like Kurt Zech warn that the market will not be able to recover without the return of foreign investors.
„When giants like Blackstone, Blackrock, Morgan Stanley, Carlyle and Apollo start buying real estate in Germany again, it will be a signal that we have reached the bottom,” Zech told Reuters.
The German government has not yet taken decisive action to address the problems of the real estate sector. Some experts are calling for government stimulus programs to support the market. However, the future of the German property market remains unclear and the recovery is likely to take a long time.
You can see detailed statistics on average property prices in Bulgaria by cities and neighborhoods HERE