Sentiment in the market for listed real estate companies has deteriorated drastically. As reported by Hamburg-based communications and strategy consultancy Kirchhoff Consult in the 14th edition of its real estate stock sentiment indicator, the corresponding index fell to minus 20.5 points. In the previous year, the figure stood at plus 24.6 points. The survey, which polled nine industry analysts, thus recorded its lowest level since its inception in 2017.
Share prices of the ten leading German real estate companies came under noticeable pressure in recent months. Over a six-month period, the stocks lost an average of around 23 per cent of their value, whilst over twelve months the decline stands at around 29 per cent. As a result, the sector performed significantly weaker than the benchmark DAX40 index. Shares are currently trading at an average of 62.8 per cent of their net asset value (NAV). Whilst this substantial discount complicates future capital increases, market observers believe it also signals significant catch-up potential.
Subdued outlook for residential and commercial stocks
Despite persistently high demand for housing and rising rents, analysts take a sceptical view of the residential real estate segment in the short term. The sub-index here dropped to minus 28.7 points. Around 56 per cent of respondents anticipate further share price losses in the near term, whereas only eleven per cent expect gains. Nonetheless, six of the experts named residential property as the most attractive asset class. In the long term, only 33 per cent of analysts forecast falling prices, whilst the majority expect sideways movement.
In the commercial property sector, the sentiment index stands at minus 16.4 points, down from 36.9 points in the previous year. Here, structural shifts in working patterns, surplus space in secondary and tertiary locations, and challenging letting conditions weigh on the segment. For the next three months, 56 per cent of surveyed analysts anticipate price declines in commercial property shares. On a twelve-month horizon, positive, neutral, and negative expectations are evenly balanced.
Interest rate levels and regulatory requirements as primary drivers
Around 67 per cent of respondents identified the financing environment and regulation as the dominant burden factors. Jens Hecht, Managing Partner at Kirchhoff Consult, explained that market participants view both factors as long-term hurdles, though the risks are already largely priced into the current valuation discount. As soon as stabilisation occurs, the low valuations could open up new investment opportunities.
- —High interest rates and restrictive access to equity weigh on operational flexibility, according to 67 per cent of surveyed analysts.
- —Around 78 per cent of experts expect the financing environment to gain further significance for share price performance in the coming years.
- —Stricter ESG requirements are classified as increasingly critical by market experts over a time horizon of more than three years.
- —The pure demand situation for space is currently no longer assessed as a primary risk factor by the experts.
With an average three-year performance of minus 13.9 per cent, German real estate equities continue to lag behind the broader market. Kirchhoff Consult's survey provides a clear sentiment picture for the second half of 2026: a sustained recovery in share prices depends heavily on when the interest burden eases and reliable regulatory frameworks take effect.
