There are growing signs that the real estate market is weakening in the six leading economies of Europe, according to a new European index published by German bank Deutsche Hypo in conjunction with independent research organisation Bulwiengesa.
If the trend persists into the second quarter, that could indicate that a turning point has been reached, Thomas Vosskamp, a management board member at Bulwiengesa, said during the presentation of the Deutsche Hypo Real Estate Economy Index (REECOX) at the Provada real estate fair in Amsterdam on Wednesday. The index provides a snapshot of the development of real estate markets in Germany, the UK, France, Spain, Poland and the Netherlands.
‘The REECOX provides a good picture and accessible overview of developments in the most important real estate markets in Europe,’ Vosskamp said. ‘Transparency is very important for real estate investors,’ added Sabine Barthauer, board member at Deutsche Hypo. ‘REECOX has helped us to significantly improve transparency in the real estate sector and offers a trend barometer and warning indicator,’ she said.
All six countries booked a decline
The first REECOX report for Q1 2018 reveals a Deutsche Hypo Euroscore of 241.6, 3.3% down on the 249.8 of the previous quarter. Nevertheless, this score is still at a relatively high level, Vosskamp stressed. ‘Although the real estate cycle is still very strong, what we see is that there are more signs of a weakening market for the first time since mid-2016.’
All six countries turned in a decline in the first three months of this year, with the UK booking the sharpest drop (-4.2%), followed by France (-3.9%). Poland turned in the most stable performance with a fall of just 0.1% while the Netherlands was above average with -1.7%. Germany was also in the middle group with a decline of 2.1%.
In all countries the decrease is linked to falling share price indices, Vosskamp said. At the end of 2017, the European real estate market reached its highest peak ever with a REECOX score of around 250, ending a rally that has been virtually uninterrupted since 2012.
With 400 staff and a balance sheet of €23.7 bn, Hannover-based Deutsche Hypo ranks as one of the largest real estate financiers in Germany.