A look at the global real estate markets shows falling prices. Despite this development, an expert from Commerz Real believes in the stability and security of open real estate funds.
Europace house price index revealed: property prices in Germany are falling
In recent months, a declining trend in property prices has been observed in large parts of the world. As can be seen from the UBS Global Real Estate Bubble Index, which was published in September 2023, prices in most of the major cities analyzed worldwide have fallen in the previous four quarters. This trend is influenced by various factors, including rising interest rates, higher construction costs and inflation-related reluctance to buy real estate, as the Sparkasse reports.
A look at the data from the Europace house price index for August confirms this development for the German market as well. The figures show that there is a decline in prices for real estate in Germany. In the period from June 2022 to August 2023, real estate prices in Germany fell by 6.71 percent.
Commerz Real expert does not expect any “relevant devaluations”
Recent price declines in the real estate market may be cause for concern, but experts remain confident that investing in open-ended real estate funds continues to offer an attractive way to build long-term wealth and minimize risks.
Despite the global decline in prices and the associated uncertainties, André Krüger, Senior Key Account Manager Sales NonBanks at Commerz Real, firmly believes in the stability and security of open real estate funds. In a conversation with TiAM Fundresearch, Krüger emphasized that he does not expect any “relevant devaluations” in these funds. According to him, this trust is based on the long-term stability and diversification that open-ended real estate funds can offer. Despite the current challenges in the real estate market, Krüger believes they are still a solid investment option.
Stock market prices are below issue prices
In contrast to the assessment of Commerz Real expert André Krüger, there are also views that take a critical view of the future development of open real estate funds. For example, Michael Thaler, board member of Top Vermögens in Starnberg, reports at Focus-online that price losses are to be feared in this asset class.
In view of the numerous challenges that can have a negative impact on the performance of open-ended real estate funds, it is surprising that numerous fund operators continue to show top prices for their products, said the expert. According to Thaler, the fact that the stock market prices of many open real estate funds are significantly below the issue prices of the fund operators is an indication that the funds’ valuations of the properties are no longer up to date.
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