A double decker bus passes the skyline with its dominating banking district in Frankfurt, Germany, Nov 8, 2023. REUTERS/Kai Pfaffenbach/File photo
FRANKFURT —German commercial property prices fell 12.1 percent in the final three months of 2023 compared with a year earlier in their biggest-ever drop, the VDP banking association said on Monday, as the nation’s struggling property industry suffers its worst crisis in decades.
For the full year, commercial real estate prices dropped 10.2 percent , accelerating their decline after small drops of less than one percent in 2022 and 2021, VDP’s data showed.
“A trend reversal is not yet in sight for property prices, despite frequent public speculation. The situation will remain difficult for the time being in 2024,” said VDP’s chief executive Jens Tolckmitt.
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For years, property in Europe and particularly Germany boomed as interest rates fell, turbocharging demand. But a sudden jump in rates and building costs tipped some developers into insolvency as bank financing dried up and deals froze.
Germany is so far Europe’s hardest hit in a rout that has also struck China and the United States. Jobs are increasingly on the line, and the industry has called for emergency aid.