Quarterly Report Q4-2018
Deutsche Hypo REECOX sees downturn at the end of the year

Dear readers,

the decrease in the Deutsche Hypo REECOX in the fourth quarter of 2018 is the largest since 2011. At first glance that development might seem a little surprising, as commercial real estate markets in the most important European states are still running well.

But when taking a second look, the current development of the REECOX was to be expected. If we consider the neverending chaos surrounding the Brexit, the social challenges in many European countries or the reduced growth forecasts. The fact that the stock markets are collapsing in this difficult environment, along with the Deutsche Hypo REECOX, is certainly alarming. But it is also understandable.

Kind regards,


Your Sabine Barthauer

Contact

Ms Sabine Barthauer
Member of the Board of Managing Directors

Deutsche Hypo REECOX sees downturn at the end of the year

While recent quarterly reports have not displayed a clear trend, and the European Real Estate Economy Index (Euro Score) has fluctuated, the direction at the end of the year is unequivocal: the REECOX Euro Score currently lies at 233.9 points, its lowest level in two years. Seen retrospectively, this development began in September, when the index value decreased by 1.0 % compared to the previous month, ending the stagnation seen over the summer. By the end of the year, with decreases four months in a row, a dynamic had become established. Such distinct movement had not been seen since the first quarter of 2018, and before that mid-2016. In September the index was at 245.4 points, corresponding to a 4.7 % decrease. Overall the Euro Score fell by 6.3 % last year, the most significant annual decline since 2011. However, the key difference is that the REECOX stood at 172.2 points at the end of 2011 – compared to 233.9 points today.

REECOX Eye Q4-2018

Deutsche Hypo Euro-Score

233.9

Poland is not following the negative trend

There is no clear driver of the current developments. Instead the majority of the countries included in the REECOX are displaying negative tendencies – although to significantly different degrees. The clearest negative movement was in the United Kingdom (-5.4 %) and France (-5.3 %), while the Polish Real Estate Economy Index more or less stagnated (-0.4 %). Over 2018 as a whole, Poland (-0.9 %) was also a positive outlier while all other countries saw significant negative development. The steepest fall was in France (-8.6 %), while the decrease in Germany was comparatively low (-4.7 %).

Change of Input Parameters and Real Estate Economic Situations
Δ Q4-2018 / Q3-2018

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

REECOX Q3-2018 / Q4-2018
DE
dodo
do
do
eq
do
dodo
GB
dodo
do
do
eq
do
dodo
PL
eq
do
eq
eq
dodo
eq
NL
dodo
dodo
do
eq
do
dodo
FR
dodo
dodo
dodo
eq
eq
dodo
ES
dodo
do
do
eq
eq
do