By Tom Sims
FRANKFURT (Reuters) -German commercial property prices rose 2.3% in the first quarter, the VDP banking association said on Monday, marking a second consecutive quarter of modest gains after years of declines.
The increase was bigger than the 0.5% gain in the fourth quarter of last year, which was the first quarterly increase since early 2022 as the country’s real estate sector grappled with its worst crisis in decades.
“The price trend at the start of the year is positive, but should not be overrated,” said VDP Chief Executive Jens Tolckmitt.
As reasons for caution, VDP pointed to trade conflicts, higher debt levels that could increase interest rates and the low volume of sales transactions.
The slump in Germany’s property sector, which began to shrink in 2022, has resulted in sharp drops in prices and developers going into insolvency.
Commercial buildings, which include offices and retail space, have remained under stress, but the market for homes has stabilized more, with prices rising more and new lending increasing.
VDP’s index is the latest evidence of further recovery.
Last month, German officials announced the loosening of a regulatory measure designed to soften the blow of a property crisis, a sign that they are somewhat less worried about fallout from the nation’s troubled real estate industry.
(Reporting by Tom Sims, Editing by Friederike Heine and Louise Heavens)
