According to a study, the market for real estate investments in Germany is not on the verge of a radical improvement in 2024 after the past crisis year.

For the current year, the majority of market participants surveyed expect transaction turnover to "perhaps rise again somewhat cautiously", said Paul von Drygalski from EY Real Estate on Wednesday. Only a quarter of those surveyed expect a further decline in transactions, compared to 80 percent last year. In addition, new insolvencies are expected in the sector, which could also affect other areas such as construction companies in 2024, following the project developers who were particularly hard hit last year.

"There are slowly increasing signs that the real estate investment market is bottoming out," said Florian Schwalm, Managing Partner at EY Real Estate. "However, we have not yet overcome the crisis." For example, the majority of respondents expect further portfolio devaluations in 2024 - which could once again have an impact on real estate companies. Large groups such as Vonovia and LEG Immobilien already had to write down their portfolios in 2023. The real estate market in Germany is also becoming less attractive for investors.

According to the study, the transaction volume on the German real estate market slumped to just under 30 billion euros last year after 67 billion euros in 2022. The last time the transaction volume was below 30 billion euros was in 2011. The sector is suffering from massively increased construction costs, high inflation and, above all, rapidly rising interest rates. Interest rates remain the dominant trend on the real estate market, explained EY.

(Report by Matthias Inverardi . If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)