Country Report Germany Q3-2019
“No real estate bubble in sight yet.”

Dear readers,

Sentiment on the real estate market remains positive. The ECB has famously announced that it will not raise interest rates in the foreseeable future. Real estate investments are therefore still attractive to investors compared to other asset classes. Liquidity is available, and the market is still receptive to all types of property, even though it is becoming more and more difficult to find real estate investments at reasonable prices. The upper limit of price and rent development appears to have been reached in A cities. As a result, the trend has been redirected towards B and C cities in expectation of further growth potential. One noticeable limiting factor, however, is the construction sector’s resources and the emerging danger of a recession. However, the party is still in full swing for now.

 

José Luis Calderón Martínez

Contact

Mr José Luis Calderón Martínez
Leiter Zentralakquisition

Phone: +49 511 3045-807
E-mail: jose.calderon@deutsche-hypo.de

REECOX Germany remains stable

Following a positive start to the year and a significant mid-year decline, the German REECOX demonstrated stable development in the third quarter. Overall, the index fell by 0.3 % to 295.6 points, which is an above-average development in the European context. Nevertheless, the price remains below the 300-point mark and a recovery is currently not in sight.

Stock markets positive, business sentiment under 100 points

Developments on the DAX, the leading German share index, were volatile. While July (-1.7 %) and August (-2.0 %) were marked by declines, September saw a 4.1 % increase to the current value of 12,428 points. Overall, the trend was slightly positive compared to the preceding quarter. The German DIMAX real estate share index made a key contribution to the development of the REECOX in the third quarter. A rise of 5.9 % to the current level of 867.6 points partially offset the significant decline seen in the second quarter. July (+5.5 %) stood out in particular, while the results in August (-0.4 %) and September (+0.7 %) remained essentially stable. In contrast to the positive trend on the German stock market, expectations regarding Germany’s economic power continued to cool. Overall, business sentiment as measured by the European Sentiment Indicator (ESI) continued its decline, falling by 3.1 % to 99.4 points in the third quarter, marking the first time since July 2013 that business sentiment has fallen below 100 points.

Synopsis of Input Variables and Real Estate Economic Situations Q3-2019

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q2-1907/1908/19Q3-19Delta (%)
Q2-19 / Q3-19
DE
eq
up
do
eq
do
296.6
296.2
295.4
295.6
-0.3
GB
eq
up
dodo
eq
do
198.9
198.6
192.7
189.5
-4.7
PL
do
up
eq
eq
dodo
186.8
186.5
184.9
185.0
-1.0
NL
up
up
up
eq
dodo
188.4
189.8
189.0
192.0
1.9
FR
up
up
eq
eq
dodo
231.8
232.1
232.8
234.7
1.3
ES
eq
up
eq
eq
dodo
198.0
198.6
199.8
199.0
0.5