The German real estate market is ending 2024 on a high note, showing remarkable resilience and growth across various sectors. This positive trend comes as welcome news after several challenging years in the property market.

A major driver of this upturn has been the European Central Bank’s recent signals about potential rate cuts and their successful efforts to manage inflation. These developments have created a more favorable environment for both property developers and potential buyers looking to secure financing.

The numbers tell an encouraging story – according to JLL, German property deal volumes are expected to have hit €35 billion ($36.7 billion) by the end of 2024, representing a 14% increase from the previous year. Looking ahead to 2025, these figures are projected to further recover, reaching €40-42 billion.

Major metropolitan areas continue to face significant housing challenges. Cities like Berlin, Munich, and Frankfurt are experiencing substantial imbalances between housing supply and demand, highlighting the ongoing need for new development. The ECB’s anticipated rate cuts in 2025, combined with progress toward their 2% inflation target, could help address this by bringing more first-time homebuyers into the market.

However, the picture isn’t entirely rosy. The commercial real estate sector remains cautious, with businesses deferring investments and optimizing their existing space usage. Political uncertainty with upcoming German elections and potential shifts in U.S.-European relations might influence market dynamics and investment decisions for the next few months.

Overall, the sentiment should evolve into a positive direction, since the market not only seems to have bottomed out, but also showing green shoots of a recovery this year.