November: Severe Setback for Real Estate Climate

November: Severe Setback for Real Estate Climate


Chart of the Month
03.11.2020 Author/s: Felix Schrader

Uncertainties regarding the further economic development are great. This is also visible in the Real Estate Climate, which has again plummeted. However, the individual segments can by no means be lumped together: While the residential climate still has a positive sign, the hotel climate is sinking to a new low.

Like everyone else, decision-makers in the real estate sector cannot act in a purely economically oriented or rationalized way. In addition to economic facts, psychological elements also play a role in the decision-making process. The perceived business situation is therefore of great relevance - more than ever in times of great uncertainty. The Real Estate Climate is based on a survey of 1,200 German market experts similar to the ifo economic test specifically for the real estate industry.

There are currently signs of a trend reversal in the Deutsche Hypo Immobilienklima (Real Estate Climate), following a noticeable recovery in September. The evaluation of the 154th monthly survey of around 1,200 real estate experts shows: The mood sank again, this time by around 4.9% to now 69.4 points. This represents a new low in the wake of the Corona crisis. A lower value was last recorded in August 2009. While the Investment Climate remained relatively stable, the Rental Climate dropped by 9.2% to 63.7 points.

Only Residential Climate with positive sign

The Residential Climate stands out from the general trend and is the only asset class to show a positive development with 133.8 points (+0.1%). In a comparison of asset classes, the Logistics Climate remains the frontrunner and shows only slight losses with a decrease of 1.7 % to now 138.4 points. Although the Retail Climate did not fall below the low of May, a significant decline of approx. 8.8 % to a value of 33.1 points was recorded. The Office Climate is different: the current survey revealed the lowest value for the time being this year at 63.7 points (-6.3%). Meanwhile, the lowest value ever recorded in the Deutsche Hypo Real Estate Climate was achieved in the Hotel Climate. After a significant decline of 32.8%, only 16.7 points were reached in October.

Note: You can read the entire October 2020 Market Report (only in German language). If you are a player in the real estate industry and would like to regularly submit your assessment, you can contact Felix Schrader informally. We are looking forward to it!

Contact person: Felix Schrader, project manager at bulwiengesa, schrader [at] bulwiengesa.de