Country Report Great Britain Q1-2019
“The real estate market seems detached from the broader political climate.”

Dear readers,

Following declines in recent months, there was hardly any movement in the REECOX this quarter – just like the BREXIT negotiations. Luckily, that was hardly noticeable in our day-to-day business. The macroeconomic factors are stable and the real estate market seems a little detached from the broader political climate – at least for the time being. We see a lot of activity on the market and significant interest from domestic and international investors. There is solid potential for growth, especially in the regions beyond London. But I consciously say “for the time being”. The current political situation makes it difficult to predict future developments.  This type of situation requires a strong, sustainable portfolio, and focus on the fundamentals: good business with reliable partners.

Markus Nitsche

Contact

Mr Markus Nitsche
Managing Director Great Britain

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

The UK Real Estate Economy Index not able to recover

Following the decline in the UK Real Estate Economy Index in 2018, there was no recovery in the first quarter of 2019 – but no further decline either. With an increase of just 0.3% to its current level of 205.1 points, there was little movement in the Real Estate Economy Index over the last three months. 

Real estate index rises by more than 20% while business climate indicator falls significantly

Analysis of the input variables reveals diametrically opposing development in stock market and business climate indicators. The UK leading share index FTSE 100 developed positively in each month of the first quarter, rising by 8.2% to approximately 7,279 points. That represented a year-on-year increase, and made up for the losses seen in the previous year.
There was an even greater recovery in the real estate index FTSE EPRA/NAREIT UK. The significant declines over the last two quarters were offset by an impressive increase of more than 20% to approximately 1,288 points.
The assessments of the real estate experts surveyed for the Economic Sentiment Indicator (ESI) presented a very different picture. It declined by 4.4% to 100.8 points and in February fell below the 100 point mark for the first time since summer 2013.

Synopsis of Input Variables and Real Estate Economic Situations Q1-2019

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q4-1801/1902/19Q1-19Delta (%)
Q4-18 / Q1-19
DE
upup
up
do
eq
do
298.2
303.4
300.8
303.4
1.7
GB
up
upup
dodo
eq
do
204.9
205.5
200.7
205.1
0.1
PL
up
upup
do
eq
do
187.5
185.9
186.5
187.6
0.1
NL
upup
up
do
eq
do
191.3
190.4
190.7
191.4
0.1
FR
upup
upup
do
eq
do
223.7
225.4
225.9
228.3
2.1
ES
up
upup
up
eq
dodo
191.8
196.4
196.5
199.3
3.9