Germany’s residential property boom may be drawing to a close, at least in some of the hot markets like Munich, Berlin and Stuttgart. Prices in those three cities may even decline by as much as a fourth or a third over the next five years.
These are among the forecasts made by the so-called “Council of Real Estate Wise Men” at the German Property Federation (ZIA) in the analysis they publish at the beginning of each year. “The time of turbulent demand in Munich, Berlin and Stuttgart has come to an end,” said Harald Simons, head of the Empirica research group and the member of the council overlooking residential real estate.
Nonetheless, both the council and other experts expect the residential market to be uneven across the country as construction continues apace and longer term projects get finished. The prospect of rising interest rates, political uncertainty and a decline in immigration are all factors that may dampen demand. Experts also fault some of the policies planned by Germany’s new coalition government as unhelpful or even counterproductive.
In the meantime, however, lagging construction of office space may be reaching critical proportions as virtually full occupancy creates shortages, the experts fear. Andreas Schulten, head of the Bulwiengesa research group and commercial property analyst for the council, spoke of a “striking lack of construction in the office sector.” He warned this could slow growth in some cities as companies postpone or relocate activity. “From an economic perspective, a shortage of office space is a dangerous signal,” he said.
The housing lobby GdW meanwhile called Tuesday for a new parliamentary committee specifically devoted to real estate issues. Housing policy in the new government is to be handled by the Interior Ministry instead of the Environment Ministry as before. But, the group argued, the Interior committee in parliament already has numerous serious issues to deal with and, given its central importance in quality of life, housing deserves to have its own committee.