News/Real Estate Finance

REECOX – Real estate sector sees turnaround in fourth quarter

REECOX Germany climbs above 300-point mark

Even though the third quarter of 2019 generally looked sobering, with relief nowhere on the horizon, the REECOX Germany managed a significant trend reversal in the fourth quarter, bringing 2019 to a positive close at over 300 points. The index rose by 3.4 % to stand at 305.6 points – its highest level in 2019. Year on year, the REECOX gained 2.8 %. The other markets monitored by REECOX also saw consistently positive or at least stable development. By the end of the year, the Euro Score had gained 2.7 % compared to the third quarter to stand at 235.2 points.

Sabine Barthauer, Member of the Board of Managing Directors at Deutsche Hypo: “Following the decline in the Euro Score in the second and third quarters, some started asking, ‘Have we passed the peak?’ The fourth quarter, however, showed us that we most certainly had not, with all countries posting stable or positive development.”

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 Union’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 positive development of the REECOX in the fourth quarter was supported by all key input variables. The DAX rose above the 13,000-point mark for the first time in a long time, finishing the fourth quarter at 13,249 points for a quarter-on-quarter increase of 6.6 %. Germany’s DIMAX real estate share index also saw similarly positive development, gaining 5.8 % quarter on quarter to stand at 907.2 points.

Thomas Hansen, Head of the Hamburg office, says: “We currently see no signs of a trend reversal in the market. Instead, there is still a sense of euphoria, even though market players are indeed bearing their exit strategies in mind in order to turn a profit in the near future. After all, who can say what the market will look like in two or three years?”