Commercial real estate prices in Germany fell in the second quarter of 2026, breaking the fragile market recovery of recent quarters, according to data from the German banking association VDP.
Office and commercial building prices fell by 1% year-on-year in the second quarter. Just three months earlier, the sector reported growth of 0.5%.
The decline comes after five consecutive quarters of price increases, which, however, managed to compensate for only part of the serious losses in the German commercial real estate market in recent years. The sector was hit hard by the sharp acceleration of inflation and the subsequent rise in interest rates after the start of the war in Ukraine. This period is shaping up to be the worst real estate crisis in Germany in decades.
The new deterioration in conditions is also linked to geopolitical uncertainty. The conflict in Iran and tensions in the Middle East are once again fueling fears of higher inflation and higher interest rates - two factors that directly make financing commercial real estate more expensive.
Unlike the commercial real estate segment, the residential market in Germany continues to grow. House prices rose by 1.9% year-on-year in the second quarter, although the pace slowed compared to the 2.3% reported in the first quarter.
VDP CEO Jens Tolkmith commented that the commercial real estate market reacts significantly more strongly than the residential market to geopolitical events, inflation expectations and interest rate movements. According to him, the future development of the sector will depend largely on whether and when the current geopolitical conflicts will be resolved.
The data also confirms the trend from a survey in July, according to which the mood among institutions financing commercial real estate in Germany deteriorated sharply in the second quarter.
The market remains sensitive to any change in inflation expectations and interest rate policy, which means that the recovery in offices and retail space is likely to continue to be uneven and dependent on external factors.
Detailed statistics on average property prices in Bulgaria by cities and neighborhoods can be seen at imot.bg