Country Report Germany Q4-2018
“Ripe fruit can only be picked and eaten for a limited time. The question is: How long exactly?”

Dear readers,

by the end of 2018, the Germany Score of the Deutsche Hypo REECOX had fallen to levels last seen in April 2017. Is that a warning sign? Perhaps! Of course, the German real estate market is still in good shape, otherwise it could never have achieved record transaction volumes of more than € 60 billion. But it seems like the air up on the plateau, where we’ve been for some time now, is slowly thinning. Geopolitical risks are increasing – that doesn't just exert downward pressure on share prices, but also on sentiment, with the result that investors are currently considering investments very carefully. Those factors are joined by the knowledge that individual asset classes can be more quickly affected by a weakening economy. My conclusion: The current real estate cycle is in a state of advanced maturity. And ripe fruit can only be picked and eaten for a limited time. The question is: How long exactly?


Your Peter Kleinhütten

Contact

Mr Peter Kleinhütten
Acquisition North Rhein-Westphalia

Phone: +49 211 598951910
E-mail: Peter.Kleinhütten@Deutsche-Hypo.de

Short decline or trend reversal for the German Real Estate Economy Index

Germany was recently the only country surveyed that still displayed positive development. But in the fourth quarter of 2018 the German Real Estate Economy Index also declined to its current level of 298.2 points. The 4.7 % decrease reflects the development of the Euro Score. However, it should be kept in mind that the index is just below the 300 point mark, remaining at a high overall level. The coming months will show whether the German Real Estate Economy Index is experiencing a short decline or if a sustained trend reversal is taking place.

DAX sees double-digit fall

As in most other countries, the development of the leading share index in Germany has had a significant effect on the Real Estate Economy Index. Last quarter, the DAX fell by 13.8 % to its recent level of 10,559.0 points – still above the symbolically important 10,000 point mark.

The rate of the change in the German real estate share index DIMAX was also negative. Over the course of the fourth quarter it declined by 5.6 % to its current level of 794.4 points. It is noteworthy that this was the first quarterly index decrease in two years.  The Economic Sentiment Indicator (ESI) developed comparatively moderately: the 2.3 % fall to its current level of 109.9 points compensated somewhat for the partially significant declines in the other input variables.

Synopsis of Input Variables and Real Estate Economic Situations Q4-2018

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q3-1810/1811/18Q4-18Delta (%)
Q3-18 / Q4-18
DE
dodo
do
do
eq
do
312.8
306.0
308.2
298.2
-4.7
GB
dodo
do
do
eq
do
216.5
213.1
206.8
204.9
-5.4
PL
eq
do
eq
eq
dodo
188.3
185.6
188.8
187.5
-0.4
NL
dodo
dodo
do
eq
do
199.3
195.3
194.8
191.3
-4.0
FR
dodo
dodo
dodo
eq
eq
236.2
229.7
228.6
223.7
-5.3
ES
dodo
do
do
eq
eq
196.4
195.8
196.4
191.8
-2.3