In The May Issue of NewsReal we examine the state of the german economy referring to recent reports about its strength and weaknesses. We also summarise a new survey of over 400 property professionals` view of when a recovery will occur in Germany.
You can read the full newsletter below, or View our printable PDF here.
GERMAN ECONOMIC NEWS
The IFO indicator, a key sentiment index, rose for the second consecutive month to 84.2 from 83.7 in April, adding to evidence that sentiment is again on the up in Germany, the world’s top exporter. The result was slightly worse than expected, though. Analysts surveyed by Dow Jones Newswires had expected the index to rise to 85. The survey “points to a gradual stabilisation of economic output at a low level.” Economists see the index as a key leading indicator to gauge the future health of the economy. It had been falling steadily - with occasional blips - since June 2008 when sentiment among firms plummeted due to the financial crisis. The good news for German firms is the latest in a string of positive data, with industrial orders and exports showing their first increases in March after falling for several consecutive months.
The ZEW index, another closely watched sentiment index, which measures the outlook of players in the financial markets, also rose to a near three- year high in May after a seventh rise in a row, it rose 18.1 points from April to 31.1 points in May - its highest reading since June 2006 and now above its historical average. The head of the ZEW Institute said the data suggested the German economy had reached its lowest point but warned that more jobs may be lost. “With regard merely to the economic activity, more and more signs indicate that the worst seems to be over. However, with regard to the labour market development the worst still seems yet to come,” ZEW president Wolfgang Franz said in a statement.
Although the economy contracted by 3.8 percent in the first three months of the year - the worst score since records began - other signs of a tentative recovery in Germany have begun to emerge. Both industrial orders and exports showed their first increases in March after falling for several consecutive months. “We’ve probably just about reached the low point,” Angela Merkel commented on Sunday (24th May 2009) and this was reinforced by European Central Bank president Jean-Claude Trichet who signaled last week (ending 22nd May 2009) that the global economy is near a turning point. “We are, as far as growth is concerned, around the inflection (turning) point in the (economic) cycle,” he told a meeting of central bankers.
PROFESSIONAL INVESTORS FAVOUR GERMANY
A recent poll of institutional investors found, 39% want to increase their real estate investments in germany as early as this year and 57% of them are planning to maintain the extent of their current
investments. Only 4% intend to make reductions. These numbers are found in the current property barometer produced by Estavis AG for which 44, primarily German, investors were polled.
The poll shows that only 2% of those polled are expecting a market recovery this year, but 66% are anticipating a recovery in 2010 and 16% expect no recovery before 2011, at the earliest. With regard to their preferred type of real estate, 61% replied, “commercial properties exclusively.” 20% are interested mainly in commercial objects, and 14% want to invest primarily in residential properties. The preferred locations for investments are the old federal states and Berlin.
WINNER CHOSEN FOR TEMPELHOF AIRPORT CONCEPT COMPETITION
The winners of design concept competition for the redevelopment of Tempelhof Airport, which finally closed in October 2008, were recently announced. Three working groups were chosen as victors for the design of the Columbiaquartier area on the northern fringe of the former Airfield. The architects chosen were locals from Berlin and a large firm from London.
There is great debate as to what should happen to the building which is one still of the 20 largest buildings in the world and has the world’s largest ground floor area. The proposals, centered on residential development, are to serve as a framework for the further development of the Tempelhof master plan. A real estate developer is to begin work during the second half of 2009.
For further opinion, detailed analysis of the prospects for the German Residential Property Market in 2009 or to find out more about investing in Germany contact us at +353 1 647 1121 or by email on info@realreturns.eu