Deutsche Pfandbriefbank's Report: European Real Estate Market Stabilizing, US Market on Hold
jh Munich
Banking institution Pfandbriefbank expresses optimism towards the market conditions.
In a recent shareholder meeting, Deutsche Pfandbriefbank's (pbb) management board announced a positive outlook for the European real estate market, though they remain cautious about prospects in the US. When questioned about the commercial real estate market, chairman Kay Wolf responded optimistically, stating, "The markets have found a clear bottom."
He expects the transaction volume to incrementally rise, despite a moderate pace. Nevertheless, Wolf assures that a majority of investors are ready to boost their investment activities in the near future.
pbb's European Strategy
pbb touted a substantial increase in new business volume to €1.1 billion in Q1 2025, a jump from the €0.7 billion reported in Q1 2024. This growth signifies a positive trend in the European market. The bank's gross interest margin in new business rose slightly to around 250 basis points, suggesting improved profitability in new transactions.
While pbb's focus remains on its core business, the broader European context presents mixed trends. For instance, property prices in Germany have risen, with the vdp index increasing by 3.3% year over year in Q1 2025, as a result of growth in both residential and commercial properties.
The US Market's Volatile State
In contrast, pbb has decided to withdraw from new business on the US property markets due to heightened volatility. Instead, the bank will review options for existing US business, rather than expanding.
Steady Transaction Volume in Europe
With the potential increase in pbb's new business volume and stable property price trends in Europe, particularly in Germany, the bank's European operations are set to continue on a positive trajectory. There's a reasonable expectation that transaction volumes may rise, thanks to growing business volumes and stable property price growth.
While pbb remains cautious about the unpredictable US market, its European operations show promise, with the potential for increased transaction volumes moving forward.
The management board at Deutsche Pfandbriefbank expects a rise in transaction volumes, indicating a positive trend in the European market, particularly in commercial real estate, which is predicted to significantly increase by investors. Despite this, the bank has decided to withdraw from new business on the US property markets due to heightened volatility, focusing instead on reviewing options for existing US business.
