Country Report Great Britain Q3-2019
“The UK real estate market remains particularly attractive for investors from the USA and Asia.”

Dear readers,

Although the REECOX declined somewhat in the third quarter, the UK real estate market is proving to be extremely resilient overall. In spite of all the uncertainties and political confusion, we have yet to see a major market correction. Instead, we are experiencing more of an uneventful sideways move. Of course, many players are being cautious. But thanks to its size and international significance, the UK’s economy is by and large not in danger. That is why the UK real estate market remains particularly attractive for investors from the USA and Asia.

Markus Nitsche

Contact

Mr Markus Nitsche
Managing Director Great Britain

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

REECOX UK indicates negative trend

In view of the continuing uncertainty during the third quarter as a result of the Brexit process, the British real estate index continued its descent. The REECOX value fell by 4.7 % quarter on quarter to 189.5 points, its lowest level since the summer of 2013.

Negative business environment dominates development

What is striking about this generally negative development is that it is not determined by stock market performance, but by forward-looking expectations related to the business climate, as measured by the Economic Sentiment Indicator (ESI), which fell by 7.5 % in the third quarter to its current level of 88 points. The last time the index dipped below this level was in December 2011. The often-volatile FTSE EPRA/NAREIT UK real estate share index saw very positive development and grew by 6.6 % to 1,223.8 points. However, the UK’s FTSE 100 leading stock market index remained stable, dropping by 0.2 % compared to the previous quarter to a level of 7,408.2 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