German property slump shows signs of bottoming out but industry cautious

Reuters

German property slump shows signs of bottoming out but industry cautious

Oct 7, 2024 at 11:18 am GMT

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Updates with graphic, industry conference in paragraphs 7-8, Vonovia CEO in paragraphs 9-10, housing minister in paragraph 11

By Tom Sims

MUNICH, Oct 7 (Reuters) -Transactions in Germany's giant yet troubled property market rose slightly in the first nine months of the year, data from JLL showed on Monday, as the global property firm and industry leaders cautioned that a rebound in Europe's largest economy will be slow.

Turnover of investment properties from January through September stood at 23.4 billion euros ($25.66 billion), a 5% increase from the previous year in a sign of a bottoming out after a two-year market implosion as the nation went through its worst real-estate crisis in decades.

Falls in prices of commercial and residential property have begun to taper off, with central bank interest rate cuts in both Europe and the United States helping to stabilise the situation, JLL said.

"However, this will not lead to a sudden firework display of sales, and from a neutral perspective, we can only hope for a moderate upturn without exaggerations and unrealistic fantasies," said Helge Scheunemann, head of research at JLL in Germany.

For years, property in Europe and particularly Germany boomed but a sudden jump in interest rates and building costs after the pandemic tipped some developers into insolvency as bank financing dried up and deals froze.

Germany has so far been Europe's hardest hit in a real estate rout that has also struck China and the United States.

The JLL data came as real-estate industry leaders gathered for an annual conference in Munich as the market was in its third year of crisis.

The ambivalent mood was captured on the cover of Germany's property trade magazine, Immobilien Zeitung, which showed a group of office workers wearing party hats but also frowns.

"The mood is turning right now," said Rolf Buch, CEO of landlord Vonovia VNAn.DE and one of the nation's property titans.

"However, we are still at a low point," he added during a panel discussion.

Klara Geywitz, Germany's housing minister, noted that despite some positive indicators, construction permits are still in decline, "which is something we have to address".

($1 = 0.9119 euros)

Property prices drop https://reut.rs/3YFYmbF

Home prices fall https://reut.rs/4djsoWu

Reporting by Tom Sims, Editing by Friederike Heine, Kirsten Donovan

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