Foreign investment in German real estate falls to lowest level in a decade
The German real estate market has witnessed a sharp decline in foreign investments, reaching their lowest level since 2013. This drop highlights the ongoing economic challenges and uncertainties impacting the sector.
Data from BNP Paribas Real Estate reveal that in the first quarter of 2024, foreign investors accounted for just 35% of commercial property transactions. This marks a significant decrease from previous years and aligns with a broader trend of declining sales volumes, which have fallen by 70% compared to pre-pandemic levels in 2020-2021.
Commercial property prices have also been affected, with a further decline of 9.6% in the first quarter of 2024 compared to the same period last year. This follows a 10.2% drop in 2023, according to the banking association VDP, which predicts more declines in the future.
Carsten Brzeski, chief economist at ING Germany, commented on the situation: "The economic engine is stuttering and requires maintenance. The market is no longer the attractive option it once was for investors."
Historically, foreign investors have played a significant role in the German real estate market, often accounting for half of all commercial property transactions. However, the current economic environment has led to a shift, with many investors pulling back.
This reduction in foreign investment is particularly notable in the commercial property sector, which dominates the German real estate market and overshadows residential property sales. As the market continues to face economic headwinds, the future of foreign investments remains uncertain.