News/Real Estate Finance

REECOX Germany reaches another all-time high

Deutsche Hypo REECOX rises to 356.4 points

The German real estate sector made considerable gains in the first quarter and continued this trend in the second quarter of the year. Consequently, the REECOX Germany climbed by an impressive 8.4 % to 356.4 points, which marks a new all-time high in the history of the REECOX (since January 1991).

Frank Schrader, Managing Director Deutsche Hypo – NORD/LB Real Estate Finance: “Across all monitored countries, the business sentiment saw double-digit growth again for the first time since tumbling at the beginning of the pandemic, indicating significantly improved economic sentiment and companies’ optimistic outlook on their future prospects. The improvement in sentiment is due not least to a sharp fall in COVID-19 infection figures in the second quarter of 2021, rising vaccination rates and associated hopes of a gradual return to normality. Let’s hope that the positive trend continues in the coming months.”

Once every quarter, the REECOX provides an overview of real estate market activity in Germany, France, the UK, Poland, Spain and the Netherlands. The index for each of the six countries is calculated using five input variables. In Germany, those variables are the DAX, the DIMAX, the European Commission’s Economic Sentiment Indicator for Germany, the basic rate of interest pursuant to Section 247 of the German Civil Code (BGB) and the interest rate for ten-year German government bonds. The REECOX Germany continues to perform positively across all input variables. The German benchmark index, the DAX, was also continuously positive from April to June and closed the quarter at 15,531 points. The German real estate index, the DIMAX, climbed by 8.1 % to just under 1,033 points. The positive development of the stock markets is also reflected in the German business climate as measured by the European Sentiment Indicator (ESI). Following a double-digit quarter-on-quarter increase of 13.0 %, the indicator closed June at a new all-time high of 117.2 points.

Thomas Hansen, Head of the Hamburg office, says: “The investment market in Hamburg is centred on office properties, with interest remaining high, despite higher levels of remote work. Still, investors in this segment are moving from speculative projects to pre-let properties, preferably with a strong anchor tenant. Vacancy levels are extremely low. Few changes in future demand for space are expected, as interest in larger conference venues and meeting rooms will compensate for declining demand for individual offices.”