Quarterly Report Q2-2019
European real estate economy faces headwind

Dear readers,

Europe is in agreement: Since early 2018, the development of the REECOX quarterly values in at least five of the six markets observed has been aligned – and that trend continued in the second quarter of 2019: With the exception of France where, happily, the REECOX rose, the Real Estate Economy Indices in all the other markets fell.

That development is, among other things, due to the deteriorating business climate in all the markets observed, with the exception of France. Escalating trade disputes and the weakening of the global economy are having an increasingly negative effect on sentiment in all markets. At any rate, companies consider their current situation and outlook to be significantly worse than in previous years. As a result of the dependence of the real estate sector on economic development, the impact of those trends on our industry is now also noticeable. We will see how sustainable the current development is as the year progresses.

Kind regards,


Your Sabine Barthauer

Contact

Ms Sabine Barthauer
Member of the Board of Managing Directors

European real estate economy faces headwind

Deutsche Hypo REECOX’s European Real Estate Economy Index (Euro Score) fell slightly in the second quarter. Following a short high in the first quarter, that continued the negative trend seen in 2018. While there were no significant changes in the months of April (-0.3 %) and June (-0.2 %), developments in May (-1.3 %) resulted in the negative trend for the quarter as a whole. The Euro Score therefore fell by 1.8 % overall, to its current level of 232.7 points.

REECOX Eye Q2-2019

Deutsche Hypo Euro-Score

232.7

Only REECOX France rises

With the exception of the French Real Estate Economy Index, the index values for all the countries observed by the Deutsche Hypo REECOX decreased in the second quarter.
That meant REECOX France developed positively for the second consecutive quarter.

That clearly contrasted with the situation in the United Kingdom: The REECOX UK displayed the largest comparative loss, falling below the 200 point mark. A year-on-year comparison underlines its dramatic development: Compared to June 2018, the index fell by approximately 20 points to its lowest level since summer 2016.
Noticeable, though less dramatic, declines were also seen in Germany
(-2.2 %) and the Netherlands (-1.6 %).

Meanwhile, the Real Estate Economy Indices in Poland (-0.4 %) and Spain (-0.6 %) were more or less stable. It should, however, be noted that REECOX Spain declined slightly but constantly, while developments in Poland were more volatile.

Change of Input Parameters and Real Estate Economic Situations
Δ Q2-2019 / Q1-2019

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

REECOX Q1-2019 / Q2-2019
DE
up
do
dodo
eq
dodo
do
GB
up
do
dodo
eq
dodo
do
PL
eq
up
do
eq
dodo
eq
NL
up
do
do
eq
do
do
FR
up
do
up
eq
dodo
up
ES
eq
up
do
eq
dodo
eq