Deutsche Hypo: change of mood rings in 2019

The year has kicked off with a change of mood, according to German lender, Deutsche Hypo - and with a healthy dash of scepticism to boot.

‘After last year’s record year, I am a bit more sceptical about 2019,’ Sabine Barthauer, member of the board at Deutsche Hypo, told REFIRE this month. ‘Going into 2019, we see that there is increased differentiation between the asset classes. For a while now, investors won’t buy just anything, much less finance it.’

Deutsche Hypo’s ‘Immobilienklima’ (investment climate) index started the year up 4.4% at 123 points, thereby wiping out December’s losses. Still, the index has fallen 11.4% from 138.9 points a year ago.

‘How the index develops this year depends on a lot of factors, including trade frictions between China and the US as well as whether we are left facing a ‘No deal’ Brexit,’ Barthauer warned. ‘If the leave date is postponed past March, all that does is prolong the uncertainty, which doesn’t help the market. German GDP growth and politics will also play a role. In all likelihood, we are looking at a sideways movement in the index this year. The overall deal volume will probably be lower than last year’s €60bn but still above €50bn.’

Offices (+6.2%) and logistics (+4%) are still very popular but there is less investor interest in high street retail because it has become less stable in the wake of e-commerce, according to Barthauer. ‘I think we’ll still see a lot of interest in office in major cities and rents will likely rise, particularly in cities such as Berlin where demand is incredibly high and the supply remains very tight. Micro living also remains a big trend.’ (ssk)