Germany’s office property prices are expected to come to a standstill for the first time in years, according to new research published by bulwiengesa.
In a new report, the consultancy firm said that it is forecasting no further price hikes in the sector for the first time since it started tracking the sector, while the office vacancy rate is expected to see a modest increase over the coming 24 months.
Prime office rents in A- and B-Class cities are expected to remain virtually unaffected by the coronavirus crisis because of the persistently strong demand for floor space and the short supply of modern office space.
‘The German office markets are defined by the fact that strong demand for space coincides with short supply,’ said Andreas Schulten of bulwiengesa. ‘The recession as it presents itself at the moment poses no serious threat to the office real estate market, as far as we can see.’
Sentiment is dragging down the market, according to Hans-Joachim Lehmann, managing director at Warburg-HIH Invest Real Estate, speaking at the Real Estate Markets Evolve conference organized together with bulwiengesa.
‘Sentiment will brighten again. We need to remember that the crisis hit a robust office real estate market with historically low vacancy rates and few property developments in the pipeline. In the medium term, the trends currently seen on the office market will level out again in favour of the office market,’ Lehmann said.
