Hesitant financial backers continue to refrain from committing to German real estate purchases
Real Estate Transactions Forecast: Cautious Optimism Amid Geopolitical Risks
In a webinar hosted by Börsen-Zeitung, participants anticipated a surge in real estate transactions over the next six months. The consensus among industry professionals, such as Markus Schutz, Managing Director and Head of European Family Offices at HQ Capital (Germany), is that the market will witness a mix of systematic and opportunistic investors.
While cautious investors are expected to maintain steady investment levels, opportunistic ones are poised to capitalize on potential market opportunities. Schutz states, "I expect the transaction volume to remain unchanged."
Geopolitical risks, however, have unnerved some investors, leading debt funds to step in and potentially fill the vacuum left by reticent banks.
According to existing data, the real estate market is going through a cooling phase, with the new home market showing signs of decline due to high interest rates and inflation. Conversely, the multifamily rental market exhibits resilience, with strong renter demand and prospects for increasing rents.
Median home prices are forecasted to increase slightly, with the National Association of Realtors predicting a 3% rise in 2025. In contrast, Zillow anticipates a 1.4% decline in home values and an increase in existing home sales in the same year. Single-family rents are predicted to rise by 3.2%, while multifamily rents are projected to surge by 2.1%.
Given these trends, investors seeking opportunities may focus on segments less susceptible to economic downturns, such as multifamily rentals or luxury properties with stable demand bases. Furthermore, some anticipate potential distress in the real estate market towards the end of 2025 or the beginning of 2026, which could benefit opportunistic investors.
Strategic considerations for investors include diversifying portfolios, maintaining a long-term perspective, and continuously monitoring market conditions to adapt strategies in line with emerging opportunities. By following these guidelines, investors may navigate the cautious yet potentially opportunistic real estate market landscape.
Investors may find it prudent to focus on segments of the real estate market that are less vulnerable to economic downturns, such as multifamily rentals or luxury properties with stable demand bases. Additionally, opportunistic investors could capitalize on potential distress in the real estate market towards the end of 2025 or the beginning of 2026, especially in strategic areas like finance and investing.
