DIFI Index remains in negative territory

JLL’s German Real Estate Finance Index (DIFI) is hovering below the zero mark at -9.7 points for the first quarter of the year, as the DIFI’s swerve into negative territory approaches the two year mark.

‘Financing has become more expensive – re-financing costs have gone up by up to 16 bps in recent months and the banks are passing that on,’ Anke Herz, team leader, debt advisory Germany at JLL, told REFIRE.

In addition to looking at financing for the office, retail, logistics and residential sectors, hotels have also been added to the DIFI Index for the first time, in a reflection of how the sector has matured.

Surprisingly, retail has seen a slight trend reversal regarding financing. It now stands at an aggregate of -39.4 points, 10 points higher than the end of last year.The financing expectations for the next six months have also improved to -50 points, from the previous sub-aggregate of -57.6 points.

‘Retail has improved a bit on the high street,’ Herz said. ‘It depends on the buyer, though, and what their leverage expectations are. LTVs can be just 45% to 55%. However, shopping centres have become more difficult. If an anchor tenant like H&M leaves, it can be very hard to find a replacement. There has been also talk of converting underperforming shopping centres into last mile delivery centres and storage buildings, such as a Karstadt store, into offices, which could also makes sense in certain scenarios.’