The global trouble spots intensified again last year. In addition to the war in Ukraine, with its considerable financial burdens on Europe, there was the Gaza conflict, which is causing a high level of uncertainty in the Arab world. The upcoming US election entails high risks, especially for NATO's established structures and cooperation with European partners. The increased financing costs and high demands on the real estate industry will continue to keep the construction industry in check in 2024.
After a weak transaction year in 2023, the investment volume in the first two quarters of 2024 is also below the long-term average at only EUR 12 billion. For the year as a whole, 30 to 35 billion euros are expected. Despite the somewhat disappointing result, however, the investment market is showing a slight upturn again, which is reflected in particular in an increase in pitches. Despite reaching the peak of interest rates and a first interest rate cut in June, further interest rate hikes are expected in the market. The current yield level has largely priced them in - but the corrections do not yet seem to be fully completed. This applies in particular to the office segment. Skepticism about this asset class is still due to the topic of remote work and uncertainty about companies' future space requirements. The question marks regarding the future energy-efficient building requirements for existing buildings also continue to cause scepticism, especially in smaller, lower-yielding markets.
In addition, there is no end to the headlines surrounding the numerous insolvencies of well-known project developers – the combination of higher interest rates and the persistently weak economy has recently caused a significant increase here.
The challenges for the industry therefore remain immense. Nevertheless, sentiment brightened in all usage segments – also compared to the previous year. For example, the Deutsche Hypo real estate climate in July 2024 was 90 points, significantly higher than the previous year's figure of 64 points. The hotel climate, which exceeded the 100 mark for the first time since the beginning of the COVID 19 pandemic in June, should be emphasized here. However, it is questionable whether the trend will continue in such a positive way. In August 2024, for example, there was another small setback - the value fell to 104 points.
