vdp-Spotlight: German property markets in good shape to face effects of pandemic

Berlin, 7. Dezember 2020

vdp analysis on impact of Covid-19 on commercial and residential properties

As things currently stand, the property markets in Germany will be able to cope well with the consequences of the restrictions that have been implemented to contain the Covid 19 pandemic. The reasons for this are the low vacancy rates with which the markets entered the crisis and the relative restraint in new construction activity in the years before. Such are the findings of a study conducted by vdpResearch GmbH and outlined in the latest issue of the “Spotlight Real Estate Market” series published by the Association of German Pfandbrief Banks (vdp).

“Germany’s property markets have so far shown themselves to be robust, even in the Covid-19 crisis,”

the vdp’s Chief Executive Jens Tolckmitt emphasized, referring to the vdp property price index for the third quarter of 2020. The property markets, he pointed out, entered the current crisis from a position of strength.

“With regard to how the property markets will develop going forward, the particular impact of the Covid-19 crisis lies in the structural changes that have ensued,” Dr. Franz Eilers, Head of Property Market Research at vdpResearch and author of the study, explained. “Shutdown and social distancing measures have triggered or reinforced complex processes.”

In this context he specifically named trends such as working from home and digitization in shopping, both of which have increased in the wake of the crisis, and which, Eilers pointed out, are related to a reorientation in the residential, office and retail property markets.

The outlook differs for each individual property class. Retail premises were already experiencing excess supply at many locations prior to the pandemic, and this surplus, according to the study, is now growing. By contrast, the study reveals that demand for office space will suffer less severely than many had feared given that more employees are working from home. Residential properties, for their part, continue to underline – even in the present circumstances – their long-standing attractiveness for investors.