From “Deutsche Hypo Immobilienkonjunktur-Index” …

The real estate sector is a key element of Europe’s economies. As one of the most important industries in the economy it accounts for a significant proportion of value added. Despite the importance of the real estate sector for overall economic development, a regular, comprehensive and up-to-date economic analysis of the industry had not been present for a long time.

Against this background, bulwiengesa AG has been publishing the Deutsche Hypo Real Estate Economy Index since January 2008, which offers a picture of both the real estate climate and Germany’s real estate economy. Its advantages include a long-term comparison, monthly publication and faster availability than official statistics. The index enables predictions about future developments in the German real estate market and serves as an early indicator for economic turning points in the real estate sector.

… to the Deutsche Hypo European Real Estate Economy Index – REECOX

In recent years, there has been increasing cross-border investment, with a preference for portfolio transactions. Knowledge of developments in individual real estate markets is therefore increasingly important for portfolio management.

Pan-European portfolio strategies require pan-European benchmark indicators

That is why, from April 2018, the Deutsche Hypo Real Estate Economy Index will be expanded to include the five most important European real estate markets. Along with Germany, it will include the United Kingdom, France, the Netherlands, Poland and Spain. The Deutsche Hypo Real Estate Economy Index is also designed to add further countries with ease.

With the inclusion of the European Real Estate Economy Indices in April 2018, the Real Estate Climate and Real Estate Economy Index were moved to two separate platforms.

  • The Real Estate Climate, a survey of 1,400 German market experts similar to the “ifo-Konjunkturtest”, but focused on the real estate sector, is now available from a separate website,
  • From April 2018 onwards, the European Real Estate Economy Indices for Germany and five additional European countries will be available at, or through the URL by using the respective country code for the United Kingdom, France, the Netherlands, Poland and Spain.

This expansion means that Deutsche Hypo’s indicators will make an even greater contribution to market transparency in the German and European real estate sector. As this information was not previously available in this form, the index has become a benchmark for the industry since its introduction.

How are the Real Estate Economy Indices calculated?

The Real Estate Economy Indices for the individual countries are based on macroeconomic metrics, which are generally available for each real estate market and allow for analysis of the economic situation. That makes a retrospective perspective on the development of the individual Real Estate Economy Indices possible.

The quantitative early indicators are derived from the development of the following input variables in the respective countries:

  • Leading share index
    • Germany: DAX
    • UK: FTSE 100
    • Poland: WIG 20
    • Netherlands: AEX 25
    • France: CAC 40
    • Spain: IBEX 35
  • Real estate share index or equivalent
    • Germany: DIMAX
    • Poland: WIG Developers (NIER)
    • Netherlands: FTSE EPRA/NAREIT Netherlands
    • France: FTSE EPRA/NAREIT France
    • Spain: FTSE EPRA NAREIT Spain
    • The latest valid monthly value is used
  • Indicator of economic sentiment
    • Economic Sentiment Indicator (ESI) of the European Commission by country
  • Basic interest rate
    • Basic interest rate pursuant to Section 27 German Civil Code (Bürgerliches Gesetzbuch - Germany) or bulwiengesa’s basic interest rate derivatives based on the benchmark rate of the ECB/central banks
  • Risk-free interest rate
    • Long-term government bonds (10 years) of the respective country

While the input variables leading share index, real estate share index and indicator of economic sentiment are always based on the most recent data available (closing price of the final working day of the previous month or previous month’s value), the variable basic interest rate and the risk-free interest rate are based on the previous year’s figures (12-month offset). This unique methodology is based on the knowledge that changes in interest rate structure do not have an impact on economic relationships in the real estate sector and activity in the real estate market until later.

The group of economic input variables (leading share index, real estate share index and indicator of economic sentiment) and the group of interest rate variables (basic interest rate and risk-free interest rate) are equally weighted.

It is important to bear in mind that the resulting weighting is not used directly on the five input variables themselves, but rather on their standardised values. Standardisation is necessary in order to guarantee the comparability of the individual input variables with regard to their mean value and volatility prior to aggregation. Otherwise, variables with a relatively high characteristic amplitude would dominate the performance of the overall indicator (i.e. the nominal weighting or the weighting called for by the methodology would not correspond with the actual contribution of each input variable to the overall indicator).

Due to the standardisation of the input variables, it is not possible to directly derive the REECOX from the monthly changes in these variables. As a result, more pronounced swings in individual input variables may sometimes not be reflected directly in the REECOX.

The monthly changes are nevertheless presented to help visualise changing conditions, making it possible to provide a forward-looking opinion on future developments in advance.

Additional information:

With the introduction of the European real estate economy indices, the calculation method for Germany was harmonised. The historical data was therefore amended retroactively, resulting in slight differences in the detailed analysis compared to old publications. The character of the information and our statements are not affected.

The data for some input variables is subject to regular seasonal adjustment. As a result, past values may be adjusted marginally. The values in past publications may therefore deviate slightly.

What is the REECOX Real Estate Eye?

The Real Estate Economy Indices are calculated each month and shown on the website. They are published quarterly in the form of a report with explanatory notes. The results are comparable at a glance thanks to the REECOX Real Estate Eye.

The REECOX Real Estate Eye not only shows the comparative current values for the individual Real Estate Economy Indices (length of the iris), but also size of the respective investment markets, which is expressed by the width of the iris and is based on the long-term average of institutional real estate investment in the respective country.

What is the Deutsche Hypo Euro Score?

To show the overall development of the European real estate economy at a glance, the individual countries are also used to calculate a compact score for the whole of Europe: the Deutsche Hypo Euro Score. This value accounts for the real estate economy for the individual countries, taking into account the various countries’ importance for the investment market. That prevents a very high real estate economy score from having a disproportionate impact on the Euro Score if the market is comparatively small.