Property Shares Show Price Gains Despite Ongoing Challenges

Kirchhoff Consult's latest sentiment indicator highlights significant optimism in property shares. The sentiment rose to 47.7 points, a marked increase from 15.7 points earlier this year. German property shares outperformed the DAX40, with residential stocks gaining 32% over the past year. Both analysts and company representatives anticipate continued growth, backed by strong housing demand.

Despite this positive outlook, challenges remain. The valuation of property firms remains below pre-crisis levels, and regulation, alongside ESG requirements, pose long-term hurdles. Analysts expect residential stocks to rise over 15% in 2025, driven by the robust demand for housing. Nonetheless, commercial stocks also show recovery signs, with a 22.8% gain over the past year, expected to continue modestly.

Uncertainties in regulation and financing continue to impact the property sector. However, easing inflation and a favorable financing environment might ease pressures. Companies focusing on ESG could gain a competitive edge, enhancing their market position.