Country Report Great Britain Q2-2019
“That’s why the motto here continues to be ‘business as usual’.”

Dear readers,

It is over three years since the Brexit referendum. Uncertainty over such an extended period is normally poisonous for any economy - normally. But the British economy has so far been unfazed by that unpredictability. Now we have a new prime minister who wants Brexit at any cost – even if that means leaving the EU without a deal. However, until now the market has seen that possibility as unlikely. That’s why the motto here continues to be ‘business as usual’. The United Kingdom is one of the world’s largest economies – and Europe’s most important real estate market. That is why the market remains attractive to investors. The current weakness of the pound sterling makes investment in British properties particularly interesting for foreign investors. Of course, we are all awaiting 31 October 2019 with baited breath. Whatever that day brings, hopefully it will, at least, end the uncertainty.


Your Markus Nitsche

Contact

Mr Markus Nitsche
Managing Director Great Britain

Phone: +44 20 742 947 00
E-mail: Markus.Nitsche@deutschehypo.com

REECOX UK falls below 200 points

After a short break at the start of the year, the significant negative development of the UK Real Estate Economy Index that began in mid-2018 continued relatively clearly in the second quarter of 2019. With a rate of change of -3.0 %, the REECOX UK fell more than any other country, to its current level of 198.9 points. It is the first time it has been below the 200 point mark since summer 2016.

British business climate sentiment negative overall

The overall negative development of the REECOX UK was primarily due to the development of real estate shares and the business climate.

The considerable volatility of the real estate index FTSE EPRA/NAREIT UK continued. Following a strong rise at the start of the year, the index saw a double-digit fall in the second quarter. A decrease of 10.9 % brought it to its current level of 1,148 points.

The business climate as measured by the Economic Sentiment Indicator (ESI) developed consistently, though negatively: It fell for the third consecutive quarter, remaining below the 100 point mark at 95.1 points. That meant confidence in economic development was negative at the end of the quarter for the first time since summer 2013.

The UK leading share index FTSE 100 was not affected by the negative development of the input variables described above. Following a clearly positive start to the year, growth of 2.0 % to 7,426 points in the second quarter was again comparatively significant.

Synopsis of Input Variables and Real Estate Economic Situations Q2-2019

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q1-1904/1905/19Q2-19Delta (%)
Q1-19 / Q2-19
DE
up
do
dodo
eq
dodo
303.4
302.4
303.1
296.6
-2.2
GB
up
do
dodo
eq
dodo
205.1
203.7
196.2
198.9
-3.0
PL
eq
up
do
eq
dodo
187.6
185.5
183.7
186.8
-0.4
NL
up
do
do
eq
do
191.4
192.9
188.4
188.4
-1.6
FR
up
do
up
eq
dodo
228.3
230.4
230.4
231.8
1.5
ES
eq
up
do
eq
dodo
199.3
198.8
198.2
198.0
-0.7