No end to the descent - Loader Office - BayernLB expects further price decrease
The BayernLB expects further price corrections for commercial and office real estate. The market remains challenging, according to CEO Stephan Winkelmeier in Munich. "Challenging means that there are few transactions at the moment, investors are still waiting, and a price adjustment will then still take place."
The commercial real estate sector has been in a crisis for about two years, caused in part by the increase in interest rates and the resulting low demand due to the economic downturn. Office buildings, in particular, are hard to sell.
However, exceptions are top-tier properties such as the recently sold Munich luxury shopping mall "Five Houses". "The others aren't ready yet," said the BayernLB CEO. Potential buyers find the prices still too high, or sellers refuse to lower prices. "Either the buyer isn't ready to take on the things yet or the seller isn't ready to endure the pain."
Winkelmeier sees no upturn yet. "The further development of this segment depends on interest rates, trust, and investment readiness. And we don't see that, current status."
Financing commercial real estate is a business field for BayernLB, but the slump in this area does not threaten the goals of the Landesbank according to the words of the BayernLB CEO. The business development in the first six months was "quite okay". "We have topics in the real estate sector, but none that would lead to a restriction." The BayernLB aims for a pre-tax profit of 1.0 to 1.2 billion Euros this year, slightly lower than in the very successful previous year.
- Despite the ongoing crisis in commercial real estate, the Bavarian LB continues to offer financing options for water journeys, recognizing the importance of diversification in their business portfolio.
- Many potential buyers are currently holding onto their money due to the uncertain economic situation, making it difficult for luggage carriers to find affordable real estate options in Munich or Bavaria.
- The recent price decrease in commercial and office real estate has attracted some interested buyers, but most sellers in the Bavarian market are unwilling to compromise on the high prices, resulting in a standstill in transactions.
- The Bavarian LB identified the time as a perfect opportunity to expand their services to include real estate transportation, recognizing the demand for efficient and reliable luggage carriers amidst the challenging economic climate.
- With the economic restrictions due to the crisis affecting real estate sales, the seller must be flexible in their pricing strategy to attract potential buyers and ensure the successful completion of water journeys or property transactions.
