The international credit crisis has failed to dent the optimism of property professionals in Germany. Once again, they are more positive about their situation than the previous year. That’s the outcome of a follow-up study on “Property Investment in Europe 2007” by Union Investment. The Property Climate Index, which tracks the sentiment and expectations of 161 property companies and institutional real estate investors in Germany, the UK and France, shows that the value for Germany nudged up a further 0.3 points to 71.3. As such, the country has overtaken France (69.3 points) and the UK (65.4 points) for the first time since 2005 when the Index was launched.
Continuing strong results for Germany
Accordingly, foreign investors again rate the German market as highly attractive: Nearly three-quarters of those surveyed (71%) describe Germany as an important location for property investment over the next twelve months. By comparison, the prior year’s figure was 65%. In addition, 30% of those participating in the survey – conducted by pollsters forsa – expect foreign investors to show (significantly) increased interest in the German property market. This positive take on the investment climate in Germany is also reflected in the upbeat outlook of German real estate investors when asked about their own business prospects: The findings of this annual survey are that 63% of German investors rate their current situation as better than in 2006. An equally emphatic majority (63%) expect business to improve over the coming twelve months.
Change of sentiment among UK investors
British real estate investors have been affected by poorer prospects for the London office property market, leading to a much more subdued mood than in the two previous years. In 2006, UK investors were mostly optimistic about the future of their business (73%), but when replying to the latest survey only 53% of them were positive about the outlook for their company over the next twelve months. “There’s a real sense of nervousness in London. The very different results compared to Germany suggest that British investors no longer believe the investment climate will improve in the short term,” says Board chairman Kutscher. Other evidence points in the same direction: Compared to the prior year, when 56% of respondents said they planned to invest more in real estate, UK investors are now far more wary. Only one in three British investors expect their company to put more money into property in the next twelve months. In contrast to expectations at the start of the year, European investors are likewise increasingly cautious about the British property market: According to the survey, only 50% of investors see the UK playing an important role as an investment location in the next twelve months (previous year: 62%).
For its “Property Investment in Europe” study, Union Investment commissioned pollsters forsa to interview 161 real estate investors and institutional property investors in Germany (70), France (46) and the UK (45) between July and September 2007. Four indicators were used to rate the investment climate: expectations, market structure, location factors, and the general environment.
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