The usual year-end rally failed to materialize in 2022.

Since real estate investors held back significantly in the fourth quarter, the annual balance sheet for the Frankfurt market shows a large minus.

This applies to both commercial and residential real estate.

According to the consulting firm Jones Lang LaSalle, 5.1 billion euros were turned over, 46 percent less than in 2021.

Gunter Murr

Editor in the Rhein-Main-Zeitung.

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It is of little consolation that the decline in the seven largest German cities is as much as 55 percent on average, which is mainly due to Berlin, where sales fell by more than 70 percent.

But there are also opposing trends.

Hamburg, for example, was able to roughly maintain the result of 2021.

Differences in the asking price

Investments in residential real estate are particularly in demand in the Hanseatic city;

according to the brokerage company BNP Paribas Real Estate, they increased by 33 percent in 2022.

In Frankfurt, on the other hand, the transaction volume collapsed by 37 percent to 570 million euros.

The level of investment is an indicator of how attractive the housing market is.

It also has consequences for construction activity, since project developers only start new projects if they have the prospect of being able to sell the property at a reasonable price.

According to the analysis by BNP Paribas Real Estate, there were "considerable differences" in the price expectations of buyers and sellers, especially in the second half of the year.

In addition to the increased financing costs, this is one reason for the reluctance of investors.

Few big sales

The environment is currently difficult for commercial real estate as well.

BNP Paribas Real Estate put the slump in sales on the Frankfurt market at around 25 percent.

Trade in the large properties typical of Frankfurt is suffering particularly from the financing costs.

The largest single transaction, the sale of the Marienturm in the banking district for around 800 million euros, fell in the first half of the year when interest rates were still low.

For 2023, however, brokers are more optimistic.

Marcus Zorn from BNP Paribas expects that a new price level will be formed in the next few months and that the market will pick up again from the second quarter.

Stefan Mergen from the brokerage firm NAI Apollo also expects the investment market for residential real estate to recover in the second half of the year.

Because these are still a safe and inflation-protected investment property.