The confidence in Germany's real estate industry persists. This is the finding of the monthly King Sturge Real Estate Economy Index in its July survey among 1,000 relevant market players. The poll-based Real Estate Climate rose for the eighth time in as many months, climbing by 7.5% from 58.9 up to 63.3 index points.
The positive sentiment is explained above all by the unchecked rise of the Investment Climate. This indicator for investment and purchase decisions reached 70.2 points (compared to 61.1 points last month). The Rental Climate, the second sub-indicator of the Real Estate Climate, remained more or less unchanged from its June rating at now 56.5 index points. By contrast, the Real Estate Economic Situation based on hard economic data slightly yielded by -1.3 points as it dropped to 128.8 points, down from 130.6 points last month. The King Sturge Real Estate Economy Index is compiled by the independent consulting agency BulwienGesa AG once a month.
Among the segment indicators, the Office Climate registered the highest increase for the third time in a row, rising by 12.6 percent up to 43.2 points. The Retail Climate and Residential Climate also kept pushing up, the Residential Climate being the only one beyond the reference mark of 100 points. At 116.2 points (111.2 last month), the majority of real estate experts rate both the current situation and the outlook on the housing market as positive. The retail indicator gained another 5.4 percent in the July survey, as it rose to 61.3 points.
"Even as the positive basic sentiment prevails, the pace of the actual recovery of the non-monetary economy is eyed with a good deal of skepticism. This reticence manifests itself in particular in the stagnating Rental Climate that gauges the expected take-up and the future rent rate performance. Aside from substantial risks and possible ramifications for the labour market, it reflects the sustained restrictive lending policy of banks, especially in regard to larger-volume deals," elaborated Sascha Hettrich, Managing Partner of King Sturge Deutschland. "Thus, the lack of financing facilities remains the most pressing problem to solve for the real estate industry, the financial economy, and the political arena."
While the Real Estate Climate has mapped the improved environmental conditions, the development of the Real Estate Economic Situation suggests that the real estate economy still has to wait for a sustainable shift in trend. Accordingly, a majority of the survey respondents remains skeptical in regard to a swift recovery of the non-monetary economy. "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," Hettrich went on to say.
Source: Business Network Marketing und Verlagsgesellschaft