Supply smaller than demand

In Germany, the volume of real estate transactions has been declining for two years. The volume of transactions in residential and commercial real estate fell from 79 billion Euros to 66 billion last year, shows the trend barometer of EY Real Estate. And the lack of investment opportunities continues: 61 percent of trend barometer respondents expect a further decline in volume this year. EY Real Estate estimates that the volume will slightly fall again - to 60 to 65 billion Euros.

This is mainly due to a lack of attractive investment opportunities, whereas investor interest remains high. Christian Schulz-Wulkow from EY Germany explains that this gap between supply and demand is increasing and owners are holding on to their properties for a longer period. The high demand combined with the low supply increases prices and prevents successful transactions.

While the barometer identified overheating in some market segments, the asset class remains attractive. The complete trend barometer with information and trends on each usage types can be found in the German report at Ernst & Young.