Success stories are currently hogging the headlines in Germany. The economic growth forecasts are being revised upward while the jobless figures are tumbling. And even the sentiment in the German real estate industry is buoyed by great optimism. Accordingly, the survey-based Real Estate Climate of the monthly King Sturge Real Estate Economy Index climbed to a new all-time high of 137.0 index points (up from 126.3 last month).
Notwithstanding all the euphoria, Sascha Hettrich, Managing Partner of King Sturge Deutschland, had words of warning as he commented the findings: "To be sure, we have every reason to rejoice not just over the 'sensed', but also over the indeed positive market development, and yet we would like to caution against exaggerated expectations. After all, it is much too early to speak of a boom in the real estate industry. Rather, we are seeing a successive return to a normal situation that is showing no signs of a renewed hype. To put it differently: Having become gradually gotten mired in general agony, the sector is no longer stepping on the brake but on the accelerator some players more cautiously than others, depending on their assessment of the risks and opportunities."
Office climate skyrockets residential segments dips slightly
Among the sub segments, the Office Climate returned a sizable 12.8% increase. Rising from 110.9 to 125.1 points, it crested in a new high-water mark, the highest since the start of the survey. It means that the severe loss in faith suffered during the crisis has been largely made up for. Also, the Retail Climate and the Industrial Climate reported gains, and currently stand at 141.0 and 124.6, respectively (previous month: 128.3 and 119.9). This made the Residential Climate the only one to soften, as it dropped by a modest 0.7%, from 161.7 down to 160.5 index points. Nonetheless, the market experts continued to vote residential real estate the safest segment by far.
Even with sentiment running high, Hettrich cautioned: "The economic development in Germany is admittedly showing fast-paced and amazingly dynamic growth at the moment, yet it remains strongly dependent on trends in the industrial and financial markets worldwide. And it is here that fears of a cooling economy in the United States, China, and the European debtor countries are mounting. As it were, the a