German real estate market sentiment returns to critical lows seen in 2022 and 2023
Executive summary: Clemens Schäfer of DWS stated that confidence in the real estate sector has dropped to levels seen during the 2022-2023 downturn. Low sentiment and financing hurdles impact open-ended real estate funds and the stability of the office market segment.
Who is involved: Clemens Schäfer (DWS), German real estate market participants.
Likely next: Monitoring of interest rate movements and office vacancy rates in German metropolitan areas.
DWS real estate expert Clemens Schäfer reports that investor sentiment in the property sector has regressed to levels comparable to the peak crisis periods of 2022 and 2023. This decline reflects ongoing financing difficulties and a bifurcated office market. The situation highlights persistent structural challenges in the German real estate sector despite broader economic shifts.
What's next — scenarios
Base: Persistent stagnation (50%)
Real estate funds face continued liquidity pressure and low transaction volumes.
- Stable or rising interest rates
- Continued high vacancy in office sectors
Upside: Market recovery (20%)
Stabilization of financing conditions leads to increased investment activity.
- Significant ECB rate cuts
- Increased demand for specialized commercial spaces
Downside: Further sector contraction (30%)
Increased defaults or significant write-downs in real estate fund portfolios.
- Sharp increase in office vacancy rates
- Further tightening of banking lending standards
What to watch
- ECB interest rate decisions
- German office vacancy rate reports
- Real estate fund redemption volumes
Timeline
- — DWS-Immobilienchef Clemens Schäfer: Die Stimmung liegt „nahe den Tiefständen von 2022 und 2023“ (Handelsblatt)
- — HDE-Konsumbarometer: Die Stimmung beruhigt sich – aber die Konjunktur zieht nicht an (Handelsblatt)
Analysis — what this means
Sectors affected
- Real estate investment trusts
- Open-ended real estate funds
- Commercial real estate lending
- Office space providers
Historical parallels
- Real estate market downturn (2022)
- Real estate market downturn (2023)
Key entities
Sources
- DWS-Immobilienchef Clemens Schäfer: Die Stimmung liegt „nahe den Tiefständen von 2022 und 2023“ — Handelsblatt
- HDE-Konsumbarometer: Die Stimmung beruhigt sich – aber die Konjunktur zieht nicht an — Handelsblatt