Real estate sector reacts to ECB’s latest interest rate cut

The European Central Bank (ECB) today reduced its key interest rate by 25 basis points to 2.0 per cent. Leaders from HIH Invest, KINGSTONE RE, BF.direkt AG, CAERUS Debt Investments, INTREAL, Hauck Aufhäuser Lampe, and Hamburg Commercial Bank shared their perspectives on the decision and its implications for the real estate sector.

Felix Schindler, Head of Research & Strategy, HIH Invest
Schindler noted that the ECB’s move was expected, given the eurozone inflation rate’s decline and ongoing economic uncertainty. He emphasized that while energy prices have eased, inflation in services and food remains persistent. He believes real assets like real estate could become more attractive as real returns on nominal investments diminish.

Dr. Tim Schomberg, CEO and Founder, KINGSTONE RE
Schomberg called the cut a possible turning point in the cycle of reductions, placing the rate close to neutral territory. He pointed out that stable long-term interest rates combined with adjustments in asset values are improving conditions for real estate investment. He expects the ECB to pause for observation following this decision.

Francesco Fedele, CEO, BF.direkt AG
Fedele expressed caution, suggesting the ECB might be cutting rates too quickly. He warned that inflation in services remains elevated and that lower key rates do not guarantee lower long-term borrowing costs, which are critical for real estate financing. Rising inflation expectations could, in fact, push financing costs higher.

Michael Morgenroth, CEO, CAERUS Debt Investments
Morgenroth highlighted falling inflation as a primary reason for the rate cut, alongside the need to support economic growth amid geopolitical uncertainties, such as US tariff policies. He considers the move a predictable response to the current economic climate.

Uwe Janz, Head of Treasury and Private Debt, INTREAL
Janz noted that the reduction had been widely anticipated, with inflation back within the target range and service sector inflation cooling. However, he warned that long-term real estate financing rates are influenced more by long-term inflation expectations and bond market dynamics, areas that still present risks.

Patrick Brinker, Head of Real Estate Investment Management, Hauck Aufhäuser Lampe
Brinker described the rate cut as a modest positive for the real estate market. While financing conditions had already improved in anticipation, he cautioned that long-term yields remain less affected. Selective market recovery is underway, particularly in specialized niches and premium assets, but broader optimism remains restrained.

Peter Axmann, Head of Real Estate Financing, Hamburg Commercial Bank
Axmann sees the ECB’s move as a signal of support for the weakening economy, helping to stabilize long-term interest rates and providing more certainty for investment calculations. He believes lower borrowing costs will assist companies reliant on income from commercial properties, potentially boosting transaction volumes.

Photo: Left to right: Prof. Dr. Felix Schindler, Head of Research & Strategy - HIH Invest
Uwe Janz, Leiter Treasury und Private Debt - IntReal International Real Estate,
Peter Axmann, Leiter Immobilienfinanzierung - Hamburg Commercial Bank,
Francesco Fedele, CEO - BF.direkt AG
Dr. Tim Schomberg, CEO & Founder, KINGSTONE RE
Michael Morgenroth, CEO - CAERUS Debt Investments in Düsseldorf,