In almost hourly intervals, bad news about the German real estate market is hitting investors, property owners, and tenants. Naturally, banks, which provide financing and carry the risks on their books, are also affected. Hardly any market seems to be as thoroughly examined as the segment of houses, towers, and apartments. There is a plethora of data from numerous real estate agencies, as well as from the Bundesbank and associations.

Complicating matters is the fact that the market is quite complex. For example, the price decline for residential properties, office buildings, or retail properties varies. In comparison to the peak prices in 2022, there is a visible decrease of about 12% for office properties.

Then there are also figures for transactions, although there is currently not much to report because transactions are scarce. Finally, rents are in focus, surprisingly rising in a real estate market that is plummeting. And last but not least, it's the interest rates that determine all calculations, in turn influenced by the ECB. The rapid increase in interest rates is what caused the crisis in the first place.

However, is there a crisis everywhere, in every corner of the market? Those who take the trouble to compare individual locations will find significant differences. In Germany, the usual focus is on the seven major cities: Berlin, Hamburg, and Munich, as well as Frankfurt, Düsseldorf, Cologne, and Stuttgart. There is no dominant market like London or Paris.

These seven cities, however, differ significantly in terms of office space turnover, referring to new leases. For instance, in Frankfurt, new leases decreased by 16% by the end of September compared to the same period the previous year. In comparison, the decrease in Berlin is 34%, and in Stuttgart, it is even 57%. In the city comparison, one might think that not much has happened in Frankfurt on the leasing side.

Looking at vacancies, there are also significant differences between the metropolises. In Frankfurt, according to the real estate agency JLL, the vacancy rate has decreased by 4% in the past twelve months, while in Berlin, there is an increase in vacancy by 28%, and in Hamburg, there is a growth of 36%. The absolute vacancy rates, ranging between 4% and 9%, are also not in an alarming span. On average, across the seven cities, 5.5% of the space is vacant, which is actually a normal value.

Even in terms of completions, there are disparities between the locations. In Stuttgart and Berlin, completions have plummeted by 50%, while Frankfurt could even report a small increase. The situation is entirely different when it comes to prime office rents, which have risen by 5 to 19% in the past twelve months. In Frankfurt, the asking price has reached 46.50 euros per square meter. Of course, this is only a figure for top-tier properties where the crisis is not as evident as quickly.

But it's not only the locations that market participants must consider with differentiation. In real estate, it always comes down to the individual property. The situation is particularly dramatic for development projects. In such cases, avoiding a stalled construction site can be challenging. It can be disheartening, especially when it involves a skyscraper like in Hamburg, intended to become a landmark for the city. However, there is also good news – at least from the market's perspective. Frankfurt is leasing an office building with 46,000 square meters, formerly the headquarters of the Deutsche Börse, to build two high schools. A good deal in gray days.

The perspective on locations and individual properties in the real estate market makes it clear that risks and opportunities are not evenly distributed. One thing is certain: the real estate crisis will not disappear overnight. However, even under challenging conditions, there are opportunities for transactions. Therefore, a nuanced view of houses, towers, and apartments is always necessary.