Germany is midway through a four-year real estate crisis that will lead to more losses and distressed sales of unwanted properties, the head of Commerzbank's real estate business told Reuters.

The euro zone's largest economy is in the grip of its worst property slump since at least the 2007-9 global financial crisis, after a sharp rise in borrowing costs and a higher proportion of riskier lending tipped the sector into one of Europe's biggest downturns.

"We believe we are at half-time right now, after two years of crisis, with two years of crisis in front of us," Henning Koch, the chief executive of Commerz Real said at this week's MIPIM property conference in the French Riviera city of Cannes.

Koch expects more investors to pull cash from the sector and more property owners to become forced sellers. "We are still seeing a hard, long way to go," he said.

Commerz Real, a fully owned subsidiary of Commerzbank, is a major owner of German real estate and has around 34 billion euros ($37 billion) of property assets globally.

The wave of distress working through the German real estate industry has provided the firm with buying opportunities, Koch said, adding he was tracking the planned sales of multiple projects owned by the collapsed Austria-based property group Signa.

"We clearly look at those situations. You want to buy out of insolvency because you have a safe legal haven and framework," he said, but added that pricing needed to reflect market realities.

European Central Bank supervisors again warned this week that commercial real estate (CRE) was "particularly vulnerable" to recent rate rises.

Analysts say that big banks' exposure in the United States and Europe is manageable and most have provisioned for a bigger deterioration in their property loan books.

Investors have put some specialist lenders under the microscope, however.

Germany's Deutsche Pfandbriefbank (PBB) has seen its shares and bonds tumble over concerns about its property exposure, including to the United States where office vacancy rates have jumped since the pandemic.

PBB made big writedowns on its property loans last week.

Gerhard Meitinger, PBB's head of real estate finance Germany, told Reuters in Cannes that he believed office prices in less-desirable "secondary" locations may have a further 10% to fall in Germany, but that the market was "close to the bottom".

Meitinger said the lender was extending more loans to help property owners cope, with the proportion of extended loans rising to 50%, up from 30% prior to the pandemic.

The bank, he said, is less exposed than alternative lenders such as asset managers and insurers that undertook more risky lending. ($1 = 0.9126 euros) (Reporting by Iain Withers Editing by Tommy Reggiori and Sandra Maler)