The year is still young and so far the German real estate finance market has been rather slow. Probably a good time to reflect what to expect for the next 12 months and  to keep an eye on the trends that will shape the industry in the coming year. Here are my 12 months predictions for the German real estate finance market:

Rising interest rates: The European Central Bank (ECB) is expected to maintain its policy of rising interest rates policy for the foreseeable future, which results in higher borrowing costs for investors and developers. The formation of a price plateau is not yet apparent.

Strong demand for residential properties: The demand for residential properties in Germany is expected to remain high due to a growing population, urbanization, and increasing numbers of households.

Growing interest in alternative real estate investments: Investors are increasingly exploring alternative real estate investments such as co-living spaces, student housing, and micro-apartments, which offer higher yields and more diverse portfolios.

Continued rise of ESG: Environmental, Social, and Governance (ESG) factors will continue to play an important role in real estate financing and investment decisions. Investors will increasingly demand that their investments align with their ESG goals.

Increased digitalization: The real estate industry in Germany is gradually embracing digitalization, which is helping to streamline processes, reduce costs, and improve efficiency.

Higher competition among lenders: The competition among lenders in the real estate finance market is expected to increase, as banks and non-bank lenders compete for market become more relevant in a rising-interest rate environment.

More funding for affordable housing: There is likely to be more funding available for affordable housing projects in Germany, as the government seeks to address the housing shortage in the country.

Greater Focus on Sustainability: The real estate industry in Germany is increasingly focused on sustainability, with developers and investors looking for ways to make their properties more energy-efficient and environmentally friendly.

Shift towards shorter loan terms: Lenders are expected to offer shorter loan terms to borrowers, as interest rates are rising while investors seek to lock in financing for longer periods.

Increased demand for flexibility: The COVID-19 pandemic has highlighted the importance of flexibility in the real estate industry, and there is likely to be increased demand for flexible financing options and lease terms.

Continued growth of real estate crowdfunding: Real estate crowdfunding platforms are becoming increasingly popular in Germany, as investors seek out new ways to invest in the real estate market.

More collaboration between lenders and developers: Lenders and developers are likely to collaborate more closely in the coming year, as both parties seek to navigate the challenges of the real estate market and find new opportunities for growth.

As the German real estate finance market continues to evolve, these trends are likely to shape the industry in the coming year. Investors, developers, and lenders who stay ahead of these trends will be best positioned for success in the months and years ahead.