German property returns continue to improve: IPD

IPD said on Wednesday that its German Annual Property Index showed an All property total return of 4.5% for 2007, a 3.2% jump on last year's 1.3% return. Property outperformed Bonds in 2007, which returned 2.5%, but underperformed Equities which returned 22.3%. In 2007 the income return on All Property edged up only slightly from last year's 4.6% to 4.7%, while capital growth rose to -0.2% compared to -3.1% in the previous year. Over three years the total return on All Property now stands at 2.1%.

Industrial was the top performing sector in 2007 with a total return of 7.1%. The Retail sector came second with a total return of 6.8%, up from 5.4 in 2006. They were followed by Residential at 6.0% which dropped 0.5% on the previous year. In comparison to other IPD country indices already released for 2007, the German results are at the lower end of the group. Norway posted the highest figures in Europe with a 18.3% total return in 2007, while France came second with 17.8%, followed by Sweden (14.9%), Spain (12.5%), Portugal (12.4%), Finland (11.3%), the Netherlands (11.3%), Denmark (10.2%), Ireland (9.9%), Italy (9.2%), and the UK (-3.4%).

'The total return on German property in 2007 has reached the highest value since the year 2002. Relative to the other European countries Germany had a weak performing property market in recent years and now the situation has improved, despite other markets like the UK experiencing a downturn', said Daniel Piazolo, managing director of IPD Germany. 'Convergence across international property markets has increased, but more importantly the German economy has picked up in the year 2007.'

The total value of the 3,901 properties covered by the IPD German Databank is EUR 44.5bn.