Country Report Germany Q3-2021
“In office real estate, an upturn in tenant demand has been apparent since the middle of the year.”

Dear readers,

“Generally speaking, the commercial real estate market is in good spirits. However, caution continues to prevail in the retail and hotel sectors. In particular, it is clear that hardly any banks are currently willing to get involved in hotel financing. The long wait-and-see period goes on here, despite a visible upturn in the market and capacity utilisation figures that are rising, but are only profitable in some cases. By contrast, the logistics market is booming everywhere – even outside prime locations. A shift in user behaviour away from just in time delivery is frequently being observed. Investor interest is still high, prices continue to rise, and no dip is in sight. In the case of office real estate, a trend reversal has been apparent since the middle of the year, with tenant demand picking up sharply. The need for space per employee is largely unchanged. However, more flexible standards and greater volumes of general space are required. Residential real estate remains in short supply. The new governing coalition’s plans for this sector are eagerly anticipated. The limiting factors increasingly affecting all asset classes are the rise in construction costs and correspondingly high construction prices.”


Your Ingo Albert

Contact

Mr Ingo Albert
Head of Frankfurt Office

Phone: +49 69 219 351 80
E-mail: Ingo.Albert@Deutsche-Hypo.de

German Real Estate Economy Index remains stable

Following positive figures at the beginning and in the middle of the year, the German REECOX proved stable in the third quarter. Overall, the index fell by 0.5 % to 354.5 points, which is below average in a European context.

Equity markets negative, business climate at new all-time high

Germany’s blue-chip index, the DAX, has been volatile in recent months: positive trends in July (+0.1 %) and August (+1.9 %) were followed in September by a slump of 3.6 % to 15,261 points, representing an overall drop of 1.7 % compared with the previous quarter. The German real estate share index DIMAX also recorded a negative performance in the third quarter, falling by 3.1 % to 1,001 points. The main reason for this decline was the month of September (-6.7 %), whereas July and August saw increases of 2.9 % and 0.9 % respectively. Contrary to the negative trends on German equity markets, expectations regarding Germany’s economic strength remain positive. All in all, the business climate as measured by the European Sentiment Indicator (ESI) rose slightly in the third quarter by 0.7 % to reach another new peak of 118.0 points at the end of September.

Synopsis of Input Variables and Real Estate Economic Situations Q3-2021

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q2-2107/2108/21Q3-21Delta (%)
Q2-21 / Q3-21
DE
do
do
eq
eq
eq
356.4
360.1
361.7
354.5
-0.5
GB
eq
up
up
eq
eq
219.9
222.8
222.9
222.9
1.4
PL
up
up
do
eq
up
197.8
198.1
198.7
198.5
0.4
NL
up
do
do
eq
do
204.3
205.5
204.6
203.3
-0.5
FR
eq
do
eq
eq
do
245.0
250.5
247.7
243.4
-0.7
ES
eq
eq
up
eq
do
183.4
184.9
184.7
186.0
1.4