(Bloomberg) -- Investor appetite for German real estate deals remained muted at the start of the year, according to Jones Lang Lasalle, even as some valuations look to be bottoming out and interest-rate cuts edge closer. 

Deals for offices, residential and warehouse properties dropped 19% to €6.3 billion ($6.8 billion) in the first quarter compared with a year earlier, the broker said Monday. That’s the weakest for the period since 2011. Sellers are having a particularly hard time finding buyers for office buildings, with transaction volumes down more than 30% in this segment.

Similar stories are playing out across Europe amid higher financing costs, slower economic growth and sluggish return-to-office trends. In Paris, investments in commercial real estate plunged in the first three months to the lowest in 15 years. A separate report from JLL last week showed office leasing volumes in Dublin have fallen to 63% below their five-year average.

JLL warned that there’s likely to be a significant increase in the number of properties that fall into restructuring, highlighting older office buildings that need updating, as well as those where deals need refinancing.

As inflation slows and central banks signal that rate cuts may start later this year, the broker expects German real estate deals to pick up through 2024. But its full-year prediction for around €40 billion in transactions would still be well below the numbers seen in record years. 

“The investment markets are slowly emerging from their state of shock at the start of the year,” said Konstantin Kortmann, country leader for JLL Germany. “However, this is not yet reflected in the figures, as transactions take a long time to complete in the current market environment.”

(Updates with figures from France, Ireland in third paragraph)

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