07 gennaio 2009
«The real estate industry has begun to feel the full brunt of the
international financial crisis. Thus, with the December returns now in from
the 1000 market players who participate in the survey, the monthly King
Sturge Real Estate Economy index shows just 40.7 index points in December
(down from 48.2 points the previous month). The unprecedented low point of
the poll-based Real Estate Climate that is conducted by the independent
market research company BulwienGesa AG can above all be blamed on the
collapsing investment market. In analogy to the mood in the industry, the
Real Estate Economy index – based on hard economic data – hit a new negative
record as it dropped from 136.7 to 126.9 index points in December.
“The transactions volume is down to a minimum, with the real estate economy
regressing to the level of 2002/2003,“ explained Sascha Hettrich, Managing
Partner of King Sturge Deutschland. “It makes a person wonder how far we
have to go yet before hitting rock bottom”.
Truly new about the global ramifications of the crisis is the brisk pace of
the plunge: While the mood among real estate players was still positive in
June 2008 – showing a Real Estate Climate of about 101 index points – the
expectations kept dropping steadily in the course of the second semester,
and hit a mere 40.7 points in December 2008. Compared to the previous month,
this translates into a 16-percent decline. The reason underlying the extreme
low-point in mood is above all the powerful downturn of the Investment
Climate, which dropped by nearly 18 percent from about 36 index points to 29
points. Thus, the willingness to invest is getting close to zero in December.
The regression of the Rental Climate, which forms the second sub-index of
the Real Estate Climate, turned out to be more moderate at ten percent. It
hit a specific value of 48 points in December.
Then as now, market participants consider residential real estate the most
stable segment. In regard to the development in the course of 2008,
residential real estate proved to be the least risky sort of investment
owing to its low volatility rate. By contrast, office and retail real estate
are characterised by a high-level volatility, and in December their mood
ratings responded with severe losses to the deterioration of the overall
economic situation.
The valuation of the market participants reflect the downturn of the Real
Estate Economy, which derives from the statistical analyses of DAX, ifo,
DIMAX, and key interest rates. This index dropped from 136.7 to 126.9 in
December.
The coming year is starting off on an ominous note: Every climate index
value has been pointing downward for months,” commented Hettrich. “The
immediate effect of the crisis will be price adjustments and an in-depth
restructuring of the market. High net worth investors, however, have ample
opportunity to make interesting investments. Here, perfect timing is of the
essence,” Hettrich added.
About the King Sturge Real Estate Economy Index
Seeing itself in relation to the ifo business climate index, the ZEW
economic expectations index, and the GfK consumer climate index, the King
Sturge Real Estate Economy index is compiled monthly on the basis of two
components, namely current business situation and current expectations.
Whereas the Real Estate Climate indicates economic turning points in the
real estate business, the Real Estate Economy – which reflects monthly
macroeconomic stats such as the DAX, the ifo business climate index, the
DIMAX, and the prime interest rates – permits conclusions regarding the
current situation within the macroeconomic development context. On the
website www.immokonjunktur.de, the panel members are able to state their
opinions on the demand among investors and occupants, on rent rates and
purchase prices, as well as on macroeconomic parameters.
About King Sturge
King Sturge counts among Europe’s largest independent, owner-operated real
estate consultancies. More than 3,800 staff in 100 branch offices worldwide
provide a comprehensive service. In addition to financial experts, project
developers, investors, and educational institutions, the company’s clients
include national governments, as well as local and regional administrations.
Moreover, King Sturge provides comprehensive expertise for market analyses.
With offices in Frankfurt am Main and Berlin, King Sturge is committed to a
sustainable growth course on the German service market» ( CS della Società).
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