Country Report Germany Q3-2022
“All in all, the normalisation of the interest rate market is a welcome development. However, the sheer pace of market movements makes the situation in the real estate sector challenging.”

Dear readers,

“The rise in interest rates – in particular the steepness of the hike – is severely affecting the market. We have seen enormous changes in the period between MIPIM in March 2022 and Expo Real in October 2022. All in all, the normalisation of the interest rate market is a welcome development. However, the sheer pace of market movements makes the situation in the real estate sector challenging. Although the mood at Expo Real was better than expected in the current situation, many market participants are pessimistic in their outlook. The uncertainty is leading to a wait-and-see approach amongst buyers and sellers and to a decrease in transactions. Business is falling sharply in the property development sector in particular, whereas the office market is proving surprisingly stable despite the overall data. In Hamburg, take-up and transactions are approaching the pre-pandemic level. The market in city centres in particular has proven to be stable. However, new working models are expected to lead to increased vacancy in backoffice locations.”

Florian Meyer

Contact

Mr Florian Meyer
Head of Hamburg Office

Phone: +49 40 37655 - 312
E-mail: florian.meyer@deutsche-hypo.de

REECOX Germany down sharply once again

The German real estate index continued its downward trajectory in the third quarter, again recording the sharpest decline (10.3 %) of all of the European markets monitored by REECOX. While July saw very little change (+0.1 %), the negative trends in August (3.8%) and September (6.9 %) played a significant role in the overall performance for Q3. At the end of the third quarter, the REECOX Germany stood at 258.9 points.

DIMAX slips below 500 points

Once again, the majority of the negative trend was accounted for by the German real estate share index DIMAX, which plunged by 19.4 % overall to 480.4 points – a figure last seen in September 2006. The German blue-chip index DAX also trended downwards, albeit to a less significant extent in relative terms. It continued its slide by falling 5.2 % compared to the previous quarter to stand at around 12,114 points. The key factors here were the losses in August (4.8 %) and September (5.6 %).  Apart from the country’s equity markets, the negative performance of the German real estate index is being driven to a large extent by expectations regarding the German business climate. The latter slumped by 11.8 % in the third quarter to 92.2 points.

Synopsis of Input Variables and Real Estate Economic Situations Q3-2022

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q2-2207/2208/22Q3-22Delta (%)
Q2-22 / Q3-22
DE
do
dodo
dodo
eq
upup
289.8
289.2
278.1
258.9
-10.7
GB
do
dodo
dodo
upup
upup
202.5
195.8
198.1
189.5
-6.4
PL
dodo
do
dodo
upup
up
183.1
181.9
179.4
175.1
-4.4
NL
do
do
dodo
eq
upup
184.8
189.5
183.2
175.8
-4.9
FR
do
do
dodo
eq
upup
225.6
231.9
227.5
219.3
-2.8
ES
dodo
do
dodo
eq
upup
178.4
174.9
175.3
172.9
-3.1