On the German real estate market, rising interest rates and the rapid rise in prices in recent years are now leading to a cooling phase.

This is also reflected in a Berlin Hyp survey published on Thursday: According to this, the German commercial real estate market has lost some of its attractiveness in a European comparison, even if it is still rated as the most attractive.

Markus Fruehauf

Editor in Business.

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In the survey of 120 real estate experts, 47 percent consider the German market to be equally attractive and 35 percent somewhat more or much more attractive.

18 percent rate the German market as less or not at all attractive.

This means that the approval ratings have fallen compared to the previous survey in the first half of 2020.

At that time, 64 percent rated the German market as somewhat or much more attractive.

Great Britain brings up the rear

Although this has lost its attractiveness, it remains in the top position.

When asked to rank from 1 to 8, with 8 being the best grade in the Berlin Hyp survey, the German real estate market still tops with an average rating of 5.12, closely followed by Scandinavia in second place with 5.01 and Austria/Switzerland with 4.87 and Benelux with 4.72 points.

France is in fifth place with 4.23 points.

Poland/Czech Republic (3.65 points) and Italy/Spain/Portugal with 3.61 points follow at the bottom.

Great Britain brings up the rear with 3.59 points.

On the part of the commercial real estate financiers, i.e. the banks, 68 percent of the survey participants currently see a limited to very limited willingness to finance.

28 percent rate it as balanced and only 4 percent as high.

On the one hand, the danger of recession and the associated higher risk of default are slowing down bank lending, on the other hand, rising interest rates are also reducing the demand for credit, because fewer and fewer real estate projects are considered sufficiently profitable.

No improvement in sight

For the next 24 months, the survey participants do not forecast any improvement in the willingness to finance.

For half of those surveyed, the willingness to finance will continue to decrease.

"In view of the current framework conditions with increasing financing costs and high equity requirements, we expect a reduced willingness to finance in the coming year," said Sascha Klaus, CEO of Berlin Hyp.