Germany's real estate market is experiencing improved investor confidence, according to the King Sturge Real Estate Economy Index. However, lack of financing remains an enormous hurdle that is preventing a swift recovery in Germany's housing market. See the following article from Property Wire to learn more.
All property markets in Germany are experiencing renewed confidence as a positive investment climate exists despite the global economic downturn, according to reports.
The office real estate sector is performing best, registering the highest increase in confidence for a third month in a row, up by 12.6% to 43.2 points, the latest King Sturge Real Estate Economy Index shows.
The residential sector is also continuing to push upwards with confidence increasing beyond 100 points at 116.2. The majority of real estate agents are now describing the current situation and the outlook for the housing market as positive.
The retail sector jumped 5.4% in July, rising to 61.3 points. Overall the poll-based Real Estate Climate rose for the eighth time in as many months, climbing by 7.5% from 58.9 up to 63.3 index points.
It is lack of finance that is likely to hold back the real estate markets, according to Sascha Hettrich, managing partner of King Sturge Deutschland. 'Even as the positive basic sentiment prevails, the pace of the actual recovery of the non-monetary economy is eyed with a good deal of skepticism. It reflects the sustained restrictive lending policy of banks, especially in regard to larger-volume deals. Thus the lack of financing facilities remains the most pressing problem to solve for the real estate industry,' Hettrich explained.
While the Real Estate Climate has mapped the improved environmental conditions, the development of the Real Estate Economic Situation suggests that the real estate economy still has to wait for a sustainable shift in trend. Accordingly, a majority of the survey respondents remains skeptical in regard to a swift recovery of the non-monetary economy.
Indeed when it comes to the commercial property market the latest figures from international property advisor Savills show that during the first six months of 2009 the total of office space acquired in the big five German office markets of Berlin, Düsseldorf, Frankfurt, Hamburg and Munich fell by 32 % compared to the same time period in 2008.
In a potential blow to the property markets Germany's DIW institute, an economic think tank has recommended increasing property taxes. Property-related tax revenue currently amounts to 0.9% of Germany's gross domestic product, less than half the average in other industrialized countries. Raising taxes to the average level of other industrialized countries would generate additional revenue of €25 billion, it is claimed.
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