Commercial Property Finance

Development of commercial property financing in 2024

Despite a slight increase in real GDP in the third quarter of 2024, economic output in Germany remained subdued. Although private consumption benefited from rising wages, the labor market has recently become increasingly gloomy. The resulting uncertainty among consumers dampened the increase in private consumption. However, other significant negative factors persisted in the third quarter, resulting in a further decline in investments in equipment and buildings.

Institutional investors remain cautious. Lending for commercial real estate is accordingly subdued. In the first nine months of 2024, lending in this segment totaled €32.9 billion, 5.7% lower than in the previous year. In addition to the economic uncertainties and less favorable financing conditions, the restraint on the commercial real estate market is largely due to structural changes. This applies in particular to the two most important submarkets in terms of lending volume: office and retail properties. While the demand for office space is undergoing structural change as a consequence of the flexibilization of work models, the market for retail properties is in a challenging situation due to structural change in the retail sector.