07 marzo 2008

«Against the background of upbeat signals from the labour market, the analysts at the property fund company DEGI Deutsche Gesellschaft für Immobilienfonds mbH anticipate a continuing uptrend in the demand for office space in 2008. This will lead to rising rentals and falling vacancy ratios on a broad front, concludes DEGI Research in its latest "Market Report Germany 2008 – New Perspectives" It means the trend of 2007 is continuing: last year, area turnovers in Germany’s office centres rose by 12 % to reach almost 3.6 million m², thus beating even the boom year of 2000. The vacancy ratio fell correspondingly by 9 %, to its present 10.8 %. As Dr. Thomas Beyerle, Head of Research & Strategy at DEGI, explains: "Around a third of the office space currently standing vacant can no longer be marketed. The in some cases unavoidable demolition of these buildings, however, will provide a stimulus for sustainable property concepts. "

Dynamic investment market
In contrast to the situation on the rental market, DEGI’s experts believe the investment market has already peaked. The often large-volume investments on the German property market reached a new record high in 2007, at 61.3 bn euros and an increase of 33 % over the preceding year. Most investments were made in office properties, accounting for 33.6 %, followed by mixed-utilisation properties at 28.6 %, residential properties at 14.8 % and retail properties at 13 %. For 2008, against a background of difficulties on the credit markets and the disappearance of leverage buyers on the German markets, the researchers are predicting the transaction volume to fall by 10 % to 25 %. "Germany’s property market, however, continues to be an attractive proposition for investors, in view of rising net initial return and a valuation that is favourable on an international comparison. This will benefit institutional investors operating with high equity ratios", says Beyerle. A comparison between current net initial returns and risk-adjusted initial returns shows that the German commercial property market is fairly priced at present.

US subprime crisis leaves the German property market cold
The outlook for retail properties is a rosy one: besides rising rentals in top locations, there is an observable trend towards higher returns. Demand from institutional investors, too, for this type of utilisation, less susceptible as it is to cyclical fluctuations, remains at a high level. Since the amount of sales area per inhabitant is already high, DEGI Research expects structural changes. „In view of ongoing transformations in purchasing habits, we anticipate a wave of revitalisation for existing shopping centres and a comeback in the inner cities", says DEGI’s senior analyst. At present, the only risk for the German property market is the rather improbable scenario of an uncontrollable global recession, believes Beyerle. Currently, the consequences of the US subprime crisis are being felt only indirectly, through the altered environment on the capital markets acting on the property investment markets. This has not affected the actual level of demand for space, says the study.

Differentiated trends from Aachen to Zwickau
The German Market Report provides a detailed analysis of the property markets not only in the nine investment centres, but also at 58 regional locations. Besides updated key statistics on the office and retail property markets, the analysts also provide trend statements in regard to the vacancy ratio and peak rentals for all the 67 locations covered, and in the "DEGI Property Location Scoring" quantify the risk of the individual locations concerned in relation to the level of return involved. Stuttgart has replaced Munich at first place in the scoring table.» ( CS della Società)