King Sturge sees German real estate climate improve

The real estate industry remains confident in the German market, according to King Sturge's Real Estate Economy Index for July. The index, which is based on responses from over 1,000 market players, rose for the eighth time in as many months, by 7.5% to 63.3 index points.

The adviser attributed the positive sentiment to the sustained rise of the investment climate. The Rental Climate sub-indicator, however, remained more or less unchanged from its June rating at 56.5 index points. The Real Estate Economic Situation index, which is based on hard economic data, fell slightly to 128.8 points from 130.6 points in June.

A majority of the survey respondents remains sceptical about a swift recovery of the non-monetary economy, noted Sascha Hettrich, managing partner of King Sturge Deutschland.

The stagnating Rental Climate index reflects ongoing concerns about substantial risks and possible ramifications for the labour market, as well as the sustained restrictive lending policy of banks, especially in regard to larger-volume deals, he said. 'The lack of financing facilities remains the most pressing problem to solve for the real estate industry, the financial economy, and the political arena.'

He added: 'For many market players, the logical question now is whether the non-monetary economy will show a steady, if slow, growth or whether a temporary relapse is to be expected. Indeed, a ‘w-shaped’ recovery of the overall economy appears most likely at the moment.'

Among the segment indicators, the Office Climate registered the highest increase for the third time in a row, rising by 12.6% to 43.2 points. The Retail Climate and Residential Climate also booked increases.

The King Sturge Real Estate Economy Index is compiled on a monthly basis by independent consulting agency BulwienGesa.