(Bloomberg) -- German banking association VDP forecasts more price drops across all real estate asset classes this year with offices hit especially hard by slower growth and sticky work-from-home trends. 

Values for office buildings could fall between 5% and 10% in 2024, VDP, which represents German real estate lenders, said in a statement on Monday. Meanwhile, retail and residential prices are expected to fall as much as 7.5% and 5% this year, respectively. 

Even as central banks signal interest rate cuts may get closer, the lobby group doesn’t expect an end to price declines in commercial real estate before the end of this year at the earliest. 

“The 2024 financial year will definitely remain challenging for all players on the real estate markets,” said VDP president Gero Bergmann. 

The crisis in real estate fueled by multiple rate hikes has hit commercial properties harder than homes as sluggish economic growth and remote working trends meant demand for offices remained subdued in 2023. Prices for commercial properties fell by 12.1% in the fourth quarter of 2023 compared to the previous year. 

Read more: Germany’s Office Property Slump Accelerates With Record Drop 

Real estate lending volumes for the specialized banks notably declined as a result of the market downturn and subdued demand from investors. In 2023, German Pfandbriefbanks granted loans totaling €110 billion, compared with €160 billion a year earlier.

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