Despite persistent uncertainties worldwide, the poll-based Real Estate Climate of the monthly King Sturge Real Estate Economy Index registered a 3.0% surge in April, and regained the high-water mark of February 2011 by scoring 144.6 index points (up from 140.4 last month).
This sufficed to balance the 2.9% dip of the previous month, turning an upward into a lateral movement in the process. The brightening sentiment among more than 1,000 market players polled is primarily buoyed by the Rental Income, which climbed by 4.9% to 141.3 points (up from 134.7 the month before). The investment trend showed a higher score, too, as the Investment Climate rose by 1.3% from 146.2 to 148.1 index points. Similarly, the signs in the sub-segments are all set for growth. The highest gain in confidence in April was registered for office real estate.
"Notwithstanding shocks worldwide, the sentiment in the real estate industry has continued to improve," observed Sascha Hettrich, Managing Partner of King Sturge Deutschland. "This is to some extent explained by the fact that the actual ramifications for the German economy have been relatively minor so far. The national-economic parameters are sound, the economy is growing, and the tax revenues are filling the public coffers. This manifests itself in the form of livelier transaction markets as well as in a steadily increasing letting and brokerage turnover."
At the same time, Hettrich warned: "That being said, the financial markets continued to be defined by threats such as sovereign debt crises, rising inflation, climbing interest rates, a soaring oil price and the high costs of the Euro." In April, die sense of unease was mirrored in the Real Estate Economic Situation Index, which is based on the statistic evaluation of the ifo business climate, DAX, Dimax, and interest rates. For the first time since September 2010, the macroeconomic indicator showed a setback as if slipped by 0.9% from 213.4 to 211.4 index points.
Hettrich seized the chance to call for a bolder policy approach: "Meanwhile, German politics could, irrespective of the international crises, contribute a wee bit more to brighten public sentiment, which has yet to fully shake its trepidation over recent events. Yet at the moment, all political initiatives seem to have ground to a halt."
Hettrich went on to say: "And in this sense, the sound economic development in Germany provides ample opportunity to set the scene for sustainable growth. After all, the willingness of businesses to invest strongly depends on clear political parameters that communicate reliability and a sense of direction."
Gap between segments slightly narrows again
Among the sub-segments, the Office Climate saw the steepest climb in April, rising by 3.7% to 136.0 points (last month: 131.1). As recently as March, the polled market players had expressed their gravest misgivings precisely in regard to office real estate. The Industrial Climate also gained, achieving 128.8 points in April (up from 127.3 in March). Retaining their uncontested lead, residential and retail property tallied the highest confidence scores with 166.7 (last month: 162.8) and 144.4 (last month: 140.8) index points, respectively.
Source: King Sturge Deutschland