BERLIN, March 31 (Xinhua) -- Investor sentiment on the German real estate market "deteriorated significantly within a very short period of time" as a result of the coronavirus pandemic, according to a survey published by consulting firm Ernst & Young (EY) on Tuesday.
According to the survey, 76 percent of real estate companies in Germany expected a declining transaction volume this year, while the figure was only 16 percent at the end of 2019.
Only four percent of real estate companies expected an increasing transaction volume, showed the survey, which covered 300 participants from all areas of the real estate industry in Germany.
"The current coronavirus crisis could have far-reaching consequences for the real estate industry," said Christian Schulz-Wulkow, head of EY's real estate sector who is responsible for the survey.
The real estate industry in Germany was strongly "interwoven" with the financial system and the economy, warned Schulz-Wulkow. In case that "blatant liquidity bottlenecks were to spread as a result of rent losses, there would be a threat of negative effects that would extend far beyond the real estate markets themselves."
Residential and logistic real estate felt the negative effects of the pandemic the least. Due to the "sharp increase" in deliveries during the coronavirus crisis, storage capacities would be further expanded, which was why a third German real estate investors expected rising prices for logistics properties.
In the residential real estate segment, at least 16 percent still expected price levels to rise. According to the survey, around half of the investors surveyed expected the price level in the segment to remain "consistently high" despite the current situation.
By contrast, office and retail properties were expected to see "sharp" falls in prices. In the area of office real estate, 73 percent expected prices to fall, and as much as 87 percent expected prices for retail real estate to fall.
The German hotel segment was a "big problem child," EY noted. Whereas at the beginning of the year prices were expected to remain constant overall, 95 percent would now expect prices to fall.
More than 80 percent of German real estate investors also feared a decline in new constructions.
