(Bloomberg) -- Germany’s market for office buildings is showing signs of a recovery, as interest rates are widely expected to fall and workers begin to spend more time at the office.
Prices for office properties climbed 0.3% in the second quarter from the previous three months, according to data published by the German banking association VDP on Monday. It was the first quarterly gain since the summer of 2022, when prices began a 17% decline.
After the downturn in real estate markets, “the potential for further setbacks now appears to be limited,” Jens Tolckmitt, VDP’s managing director, said in a statement. He cautioned that the situation for commercial properties remains tense, with transactions still being at a below-average level.
Real estate markets have been under pressure for two years as higher interest rates saddled many building owners with surging borrowing costs and plunging valuations. Office properties have been particularly hard hit as workers were slow to return to offices following the pandemic.
But European companies are now gaining the upper hand with their workers when it comes to office attendance. Rates of use have climbed on the continent, with the largest companies making the biggest gains, according to a recent CBRE Group Inc. survey.
The European Central Bank also started to lower borrowing costs in June and traders expect a further loosening of monetary policy at its next meeting in September after a pause last month.
The VDP has about 50 members, including Deutsche Bank AG, Commerzbank AG and Germany’s regional Landesbanks.
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