The sharp rise in lending rates and the mood of crisis are leaving deep marks on the real estate market. The investments of large investors in residential real estate have collapsed at the beginning of the year, as the real estate specialist Jones Lang LaSalle (JLL) announced on Wednesday in Frankfurt. In the first quarter, the transaction volume in Germany fell by almost half – to around 2.1 billion euros.
For example, purchases and sales of residential portfolios, i.e. packages consisting of numerous residential units, were considered. In the same period of the previous year, the transaction volume had been four billion euros. Over five years, the decline is even greater at two-thirds, according to JLL.
Buyers and sellers had not yet fully adjusted to the consequences of rising interest rates, even if the price expectations were converging, it was said. In the first quarter, 39 deals were counted, around half as many as in the fourth quarter of 2022.
Population is growing
For a market to pick up, the strongly fluctuating interest rates would have to stabilize and uncertainty on the capital market would have to disappear. In addition, "signal-effective transactions" of listed housing groups were missing, said JLL expert Helge Scheunemann.
Nevertheless, the gap between housing supply and demand is likely to continue to grow, according to JLL's forecast. Because of high construction prices and sharply increased interest rates, many projects would be canceled. This year, the real estate specialist expects 230,000 to 240,000 completed apartments, far from the former goal of the federal government of 400,000 new apartments annually. At the same time, the population is growing due to high immigration, including from Ukraine, and thus also the demand for housing. Pressure on rents likely to remain high