German housing deals appear to be on the rise, but at a near-decade low according to Reuters

Written by Tom Sims

FRANKFURT (Reuters) – A key indicator of the health of Germany’s construction sector is likely to improve in 2024 and will gain further next year, but will remain close to its weakest levels in more than a decade, underscoring the sector’s difficulties, forecasts on Tuesday showed. .

Real estate firm Jones Lang LaSalle (JLL) has predicted that real estate transactions in Germany will reach 35 billion euros ($37 billion) by 2024 and further increase to between 40 and 42 billion euros. in 2025.

The forecasts, if they come out, could mean that the year 2023 will be a low point in what has been a major problem for the industry in the largest European economy. But they also point out that any recovery will be slow.

“Despite the growth, the picture is still surprising,” JLL said.

The weak economy has led companies to abandon or postpone relocation and expansion plans, he said.

For many years, assets in Europe, especially in Germany, increased as interest rates fell, increasing demand. But sudden jumps in interest rates and construction costs have driven some developers into debt as bank financing dries up and deals fall through.

Germany has been hit hard by the European housing crisis that has also hit China and the United States.

The reduction in interest rates has since provided some support to the market.

Separate data on Tuesday showed continued weakness in the German economy, with business sentiment worse than expected in December, weighed down by companies’ pessimistic assessment of the coming months amid global uncertainty and an industrial slowdown.

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