26 agosto 2008

«The mood on the German real estate markets has continued its descent though August. In the August issue of its monthly survey among 1,000 relevant market players, King Sturge clearly diagnosed a pessimistic note. For one thing, the survey-based Real Estate Climate dropped down to 77.5 index points, reflecting the macro-economic downturn. This means that last month’s figure of 90.8 was undercut by 14.6 percent. The Real Estate Economy index, which is based on hard macro-economic data, plunged to 158.8 points (down from 169.2 points last month).

“The mood in the real estate economy has cooled off further in August, and noticeably so. This comes as no surprise, as the macro-economic decline has become all too obvious,“ commented Sascha Hettrich, Managing Partner of King Sturge Deutschland. “There is the very real danger that Germany’s economy, following a negative growth phase in Q2, may continue to shrink in Q3. If so, you could say that Germany might slide into a recession, as the term is commonly understood.”

The negative mood on the real estate market manifests itself most patently in the Investment Climate, which captures the willingness to invest. This index dropped from 69.2 down to 57.9 points, whereas the Rental Climate – the second sub-indicator of the Real Estate Climate – undercut the threshold value of 100 points for the first time as it plummeted from 114.1 down to 98.7 points. The massive decline by 13.5 percent illustrates that even the portfolio holders have ceased to expect sales prices or rent rates to rise anymore. Among the several sub-segments, the market players considered residential real estate to be more stable than the office and retail sectors. Nonetheless, the residential climate similarly undercut the 100-point mark for the first time.

Under the impression of the bleak economic parameters, the Real Estate Economy index, which is based on statistical evaluations (DAX, ifo, DIMAX, interest rates), showed a major decline. Having registered 169.2 index points as recently as July, it currently stands at 158.8 points.

“Nevertheless, there is no need to paint an unnecessarily bleak picture.” argued Hettrich. “After all, a number of relieving factors is already visible, actually suggesting that the German real estate market – which continues to be rather robust – is facing nothing worse than a downturn, and by no means a nosedive.” Hettrich added: “As a case in point, the number of jobs is actually increasing, and is doing so at a stable, if slower, rate. Add to this that the inflation rate has levelled out because the prices for oil and commodities are declining. Thus, there is reason to hope that the European Central Bank might have more leeway for lowering interest rates – which in turn would buoy the real estate economy.”» (CS della Società)