The new interest rate situation – how do we deal with it?

Inflation rates in Germany, the Euro zone and the USA have risen sharply since Q4 2021. At least since the central banks drastically raised interest rates in the first half of 2022, the real estate market has been in a state of upheaval. The biggest effect the interest rate increases have on financing and refinancing of assets is significantly higher capital costs. The result is a reduced valuation of real estate based on the capitalized value. Due to a large bid-ask spread few transactions have taken place since the interest rate hikes and many investors are waiting for the cost pressure on the buy side to ease or the refinancing pressure on sellers to increase.