Notwithstanding the upward trend of the German economy as a whole, the December poll for the King Sturge Real Estate Economy Index suggests that sentiment in the real estate industry has cooled off slightly towards the end of 2010. In December, the survey-based Real Estate Climate dropped by 1.6% to 134.8 index points from the previous month. marking the second monthly decline in a row.
Notwithstanding the upward trend of the German economy as a whole, the December poll for the King Sturge Real Estate Economy Index suggests that sentiment in the real estate industry has cooled off slightly towards the end of 2010. In December, the survey-based Real Estate Climate dropped by 1.6% to 134.8 index points from the previous month. marking the second monthly decline in a row.
'The downturn is a little more pronounced this time than it was the month before, but the level remains high then as now,' observed Sascha Hettrich, Managing Partner of King Sturge Deutschland. 'In December, the levelling out of the seeming euphoria of recent months is explained primarily by the decline in investment sentiment.'
Indeed, the Investment Climate dropped by 2.1%, from 143.2 to 140.2 index points. Unlike the previous month’s survey, December also saw a first downturn for the Rental Income sub-indicator of the Real Estate Climate by 0.9%, from 130.6 to 129.4 points. The sub-indicator reflects the expectations of the more than 1,200 polled market experts in regard to user demand and corresponding rent rate development.
On the segment level, the majority of segments showed a slight deterioration of sentiment. The Retail Climate returned the steepest losses at -3.6%, dropping from 140.4 to 135.4 index points. The Residential Climate declined by 2.8% to 159.9 points (down from 164.5 points the previous month), the Industrial Climate by 0.2% to 129.4 points (down from 129.6 points). The office segment bucked the trend with an improved month-on-month score and now stands at 124.2 index points (up from 123.6 last month).
'Despite the flagging euphoria in the real estate industry and the fickle international markets, the "hard" macroeconomic facts keep rallying,' Hettrich said. The Real Estate Economic Situation index, based on the statistical analysis of ifo Business Climate, DAX, Dimax, and interest rates, grew by 0.6% in December, achieving a score of 205.9 index points compared to 204.6 the previous month before.
The King Sturge Economy index is compiled monthly on the basis of two components: current business situation and current expectations.
