German property professionals cautious on recovery: King Sturge

The King Sturge Real Estate Economy Index shows another increase of almost every climatic indicator for November. As with the October survey, the real estate experts polled are reticent in their assessment of the market situation because of the constant threat of more bad news.

In November, the poll-based Real Estate Climate rose by 2%, from 78.2 to 79.8 index points. The growth driver this time was the Rental Climate. Expectations vested in the rent and income development drove this index up by 2.7% to currently 68.6 points (compared to 66.8% the previous month).

Unlike the earnings prospects, which continue to be eyed with scepticism in the face of threatening insolvencies and rent losses, the Investment Climate approached the threshold mark of 100 points - reflecting a balanced sentiment ratio - as it climbed from 9 points in October to 91.4 points in November.

Serving as indicator of the investment and purchase opportunities, it thus reported a slight growth of 1.5% in November. By contrast, the Real Estate Economic Situation Index, which is based on hard macro-economic facts, reported an increase up to 149.7 index points (previous month: 146.8). These are the findings of the November survey among roughly 1000 market players that the independent market research institute of BulwienGesa conducted on behalf of King Sturge.

'There is little reason to expect the economic crisis to end anytime soon,' commented Sascha Hettrich, managing partner of King Sturge Deutschland.

'With this in mind, the poll returns for the Office Climate assume a surprisingly positive significance. After all, the looming threat of job cuts made it reasonable to expect the gravest problems in this segment. For the time being though, the office letting markets remain relatively stable.'