Expert from Commerz Real: Despite the global decline in real estate prices – stability in open real estate funds

A look at global real estate markets shows falling prices. Despite this development, an expert from Commerz Real believes in the stability and safety of open real estate funds.

Europace house price index revealed: property prices in Germany are falling

In recent months, a downward trend in real estate prices has been observed in large parts of the world. As seen in the UBS Global Real Estate Bubble Index, which was published in September 2023, prices in most analyzed major cities around the world fell in the previous four quarters. Various factors are driving this trend, including rising interest rates, higher construction costs and an inflation-related reluctance to buy real estate, according to Sparkasse.

A look at data from the Europace house price index for August confirms this development for the German market as well. The numbers show that property prices are falling in Germany. Between June 2022 and August 2023, property prices in Germany fell by 6.71 percent.

Commerz Real expert expects no “relevant devaluations”

Recent declines in real estate prices may be cause for concern, but experts remain convinced that investing in open-end real estate funds continues to offer an attractive way to build long-term wealth and minimize risk.

Despite the global downward price trend and related uncertainties, André Krüger, Senior Key Account Manager Sales NonBanks at Commerz Real, firmly believes in the stability and safety of open-end real estate funds. In an interview with TiAM Fundresearch, Krüger emphasized that he does not expect any “relevant devaluations” for these funds. This trust, he says, is based on the long-term stability and diversification that open-end real estate funds can offer. Despite the current challenges in the real estate market, Krüger believes they are still a solid investment option.

Prices on the stock exchange are below the issue prices

Contrary to the assessment of Commerz Real expert André Krüger, there are also opinions that are critical of the future development of open real estate funds. For example, Michael Thaler, board member of Top Vermögens in Starnberg, reports on Focus-online that price losses are to be feared in this asset class.

Given the numerous challenges that can have a negative impact on the performance of open-end real estate funds, it is surprising that a number of fund operators continue to show the highest prices for their products, the expert said. According to Thaler, the fact that the stock market prices of many open-end real estate funds are significantly below the issue prices of the fund operators indicates that the real estate valuation funds are no longer up to date.

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