France, Germany: The real estate market is under pressure due to instability in real estate funds.

In the era of low interest rates, a flood of cash has poured into European real estate investment funds.

Given the increasing cash buyouts, the desire to sell off assets and raise funds to pay investors threatens to end a long-standing conflict that arose last year when rising interest rates forced buyers to make minimal offers, which did not satisfy sellers.

According to MSCI data, investments in commercial real estate across Europe have decreased by59%In the first half of the year, the prices of properties, which have already started to decline by double-digit percentages, are at risk of further falling as funds begin to divest their assets.

This situation is particularly risky in France and Germany, where new types of funds and regulations introduced after the global financial crisis are facing a serious test.

France

French OPCIs aimed at retail investors have been put up for sale for more than5 billion euros(5.2 billion dollars) in real estate on both domestic and foreign markets.

Germany

In Germany, the process is complicated by rules requiring investors to wait a year to withdraw their funds; however, signs of pressure are already visible in the form of declining prices in fund trading.