FRANKFURT (dpa-AFX) - Real estate stocks weakened across Europe on Tuesday after Easter. The Stoxx Europe 600 Real Estate fell by 1.5 percent in a positive overall market, bringing up the rear in the sector tableau. Interest rate trends remain an important driver for real estate companies, some of which are still struggling with high levels of debt. From the end of October, the sector benefited from the prospect of interest rates falling again soon and recovered significantly. From mid-January, however, expectations of interest rate cuts were pushed back further and further. The price recovery ran out of steam.

Inflation data from the German federal states on Tuesday painted a picture of a declining inflation rate, which is actually positive for real estate stocks. This means that expectations of a key interest rate cut by the European Central Bank (ECB) in June have at least not been pushed back any further. Nevertheless, investors are still waiting for figures for Germany as a whole in the early afternoon and for the eurozone on Wednesday.

Investors are now looking even more cautiously at the key interest rate trend in the USA - due to higher than expected inflation and generally positive economic data.

In this context, analyst Stephen Innes from SPI Asset Management referred to sentiment data from US industry published on Easter Monday, which was surprisingly positive. Although this is positive for the economy, it also brings with it unpleasant signals of inflation.

High interest rates are unfavorable for real estate companies, some of which had grown strongly in the years of low interest rates thanks to high levels of debt. However, refinancing has become significantly more expensive due to the significant interest rate hikes by the Fed and ECB in 2022 and 2023. In addition, companies often had to significantly devalue their real estate portfolios on their balance sheets.

In terms of the German stock market, Vonovia brought up the rear on the DAX on Tuesday, falling by a good 3%. The experts at investment bank Goldman Sachs removed the shares from their "Conviction List" of particularly promising stocks.

In the second and third tiers, TAG Immobilien, LEG Immobilien, Aroundtown and Grand City Properties also fell significantly.

The shares of real estate financier Deutsche Pfandbriefbank and financial services provider Hypoport, which specializes in brokering real estate loans, also came under pressure./mis/ck/jha/