The real estate crisis in Germany may still get worse

Germany is only halfway into the real estate crisis that will lead to further losses and forced sales according to the head of Commerzbank.
As highlighted on Reuters, the euro zone's largest economy is under pressure with the property sector struggling in a way that hasn't happened since the global financial crisis of 2007-2009.
In those years, a sharp increase in financing costs and a higher percentage of riskier loans had led the sector into one of the biggest recessions in Europe.
Now, Henning Koch, CEO of Commerz Real, at this week's MIPIM real estate conference on the French Riviera warned about the danger of the German crisis which still has room for worsening.
Germany, the real estate crisis will continue “We believe we are halfway there now, with two years of crisis ahead of us” said Henning Koch, CEO of Commerz Real.
Koch expects more investors to withdraw cash from the sector and more property owners to become forced sellers.
“We still see a long and difficult road ahead,” he said.
Commerz Real, a wholly owned subsidiary of Commerzbank, is a leading German real estate owner and owns approximately €34 billion in real estate assets globally.
read also Germany, this record data scares the economy The wave of crisis sweeping through the German real estate sector has provided the company with purchasing opportunities, Koch said, adding that he was monitoring the planned sales of numerous projects owned by the failed group Austrian real estate Signa.
The context continues to be worrying throughout Europe.
Supervisors at the European Central Bank again warned this week that commercial real estate (CRE) is “particularly vulnerable” to recent rate rises.
Just under 4% of these loans were classified as non-performing, above the average…for loans in general, European Central Bank supervisor Claudia Buch warned.
What's happening to German banks with the real estate crisis Germany's Deutsche Pfandbriefbank has seen its shares and bonds tumble due to concerns about its real estate exposure, including to the United States.
PBB took large write-downs on its real estate loans last week.
Gerhard Meitinger, head of German real estate finance at PBB, told Reuters he believed office prices in less desirable "secondary" locations could fall by a further 10% in Germany, but that the market was "close to the bottom".
read also US housing crisis hits Germany and alarms banks Meitinger said the lender is extending more loans to help property owners, with the percentage of loans granted rising to 50%, up from 30% before of the pandemic.
The bank, he said, is less exposed than alternative lenders such as asset managers and insurers that have undertaken riskier lending.