1. Research
  2. Products & Topics
  3. Topics
  4. Real estate

Further disappointments

November 5, 2014
Region:
We have cut our German GDP growth forecast from 1.5% to 1.3% for 2014 and further from 1.5% to 0.8% for 2015. We do not see Germany falling into a technical recession in Q3. But the 6 month slump of the ifo index has increased the risk that we might see a negative GDP print in Q4 2014 or Q1 2015. The positive effect of weaker oil prices will be offset by wage growth slowing from 3% plus this year towards 2% in 2015, as export-orientated sectors will respond to weaker external demand. Further topics in this issue: German industry: Temporary slowdown; German construction: Robust investment, but price momentum slowing; Inheritance tax: Constitutional Court ruling likely to weigh harder on business heirs; 25 years after the fall of the Berlin Wall: "Blooming landscapes" only in part. [more]

More documents about "Real estate"

35 (21-32)
November 28, 2016
Region:
21
The question regarding the consequences of a Brexit for the EU, the United Kingdom and Germany is expected to remain unanswered for some time. The political uncertainties and exit scenarios range from a contentious separation to a second referendum. At present, however, we can expect that Frankfurt will be one of places to benefit most from a Brexit. In light of the differences between the size of London and Frankfurt, London's crumbs could become Frankfurt's pie. The relocation of jobs to Frankfurt is also likely to boost property demand. The additional demand potential is welcome on the Frankfurt office market because it will equalise structurally induced reductions in the financial sector and will tend to lead to further reductions in vacancies and increase rents. The assumed 5,000 office workers are likely to relocate to the highly priced sub-markets close to the city centre. However, as new building projects also focus on these sub-markets, positive demand effects will be diluted. Because of existing demand overhangs, disadvantages are emerging on the Frankfurt residential property market from a potential relocation of employees. Price growth and the shortage of housing will remain elevated for the foreseeable future. An additional 5,000 homes and a correspondingly elevated housing shortage are likely to drive prices up by more than EUR 100 per m². While purchase prices remain affordable thanks to low interest rates, they are strongly dependent on future interest rate developments. [more]
July 27, 2016
Region:
22
There is a high level of excess demand in the housing market and it has grown in recent years. Demand for credit is also growing at a correspondingly rapid pace. The supply of credit could be boosted by further monetary stimulus. In the medium term, more buoyant lending is likely to increase interest rate risk. However, if lending growth remains low, there will be increased risk of overvaluations and a house price bubble. This is particularly true when little new housing is financed and lending is largely for existing property. Given the high level of excess demand in the housing market and the fact that office buildings are being converted to residential buildings, office space is also likely to be in short supply in the coming years. As a result, rents in the office market can be expected to rise more strongly, and could – for a time – outstrip the rise in rents in the housing market. Since Chancellor Merkel assumed office in 2005 her term has been dominated by crisis management, which often required leadership and moderation of differing interests in Europe. Managing the UK’s departure from the EU will have top priority for the time being. Nonetheless, Merkel is likely to focus her attention on domestic topics as much as on European ones in the upcoming months given the looming federal elections in autumn 2017. Also in this issue: Fewer insolvencies in German industry. [more]
April 4, 2016
Region:
23
According to our and consensus expectations Germany will record 4 years (2014-2017) of above potential GDP growth in an extremely narrow range of 1.5% to 1.7%, despite substantial shocks and massive swings in growth drivers. If growth breaks out, a downside move seems more likely than higher growth. The economic slowdown in the oil-producing countries due to the falling oil price also carries implications for the German economy in terms of its foreign trade. Although the overall effect is positive for the German economy, German exports to oil-producing countries remain under pressure. Capital spending on residential construction has been growing sluggishly in recent years. The main reasons are: a shortage of building land, increased regulatory hurdles in virtually all construction sectors, high construction costs and a lack of skilled workers in the construction industry. [more]
March 3, 2016
Region:
24
Despite the challenging environment German exporters gained global market share in 2015. The year 2016 has not got off to an auspicious start, however. Our new “Export Indicator” points to a double whammy for German exports in 2016. The less favourable outlook for the demand and especially for the exchange rate impact looks set to slow export growth to around 3% in 2016. When analysing German exports, it is worth looking at sector-specific factors as they can play an even more important role than the macroeconomic environment. Overall, German industry faces a challenging year for exports. Further topics in this issue: House prices: Imminent return to normal, overvaluation likely; GDP growth 2016: More domestically driven & facing more downside risks; Merkel likely to weather even weak state election results. [more]
October 7, 2015
Region:
25
It will take many years to reduce the demand overhang in the housing market if there is not a huge jump in building activity. This harbours the risk that the current phase of prices returning to normal could first lead to overshooting and end in a market correction. This scenario comes with high economic costs. These could be avoided by improving depreciation conditions for newbuild housing in Germany's large cities and metropolitan regions. [more]
October 2, 2015
Region:
26
Although the external and the financial environment have deteriorated we have lifted our 2016 GDP call to 1.9% (1.7%). Drivers are stronger real consumption growth due to lower oil prices/stronger EUR and the surge in immigration which should ceteris paribus add about ½ pp to consumption (split between private and public). The risks are mainly external (EMs). We lower our forecast for German inflation (national definition) in 2015 and 2016 to 0.3% and 1.3% from 0.5% and 2.0%. The relatively large adjustment for 2016 is due to the weaker inflation development in H2 2015 and due to our expectations of a weaker dynamic in 2016. [more]
June 1, 2015
Region:
27
The Q1 GDP details provide some comfort relative to the disappointing 0.3% qoq headline number. Final domestic demand was up 0.8% qoq while net-exports as well as inventories both provided a drag. Thus, our 2015 story of GDP growth driven by strong domestic demand remains intact. Despite this, we lower our 2015 GDP forecast from 2.0% to 1.6%. This is primarily due to the weaker-than-expected Q1 GDP growth that provides a lower starting base for 2015. However, we still expect quarterly growth rates to average a healthy 0.4% qoq in 2015. Further topics in this issue: Construction investment: Sharp increase expected, but focus on downside risks, The view from Berlin. German politics: Quarrel among friends and families. [more]
May 28, 2015
Region:
28
Politicians should focus on an expansion of building activity in the major cities and conurbations in order to reduce the upside pressure on house prices. In the past few months there have been indications of easing activity in the construction sector. If this trend materialises, the pressure on house prices will intensify further. One possible cause of this development is capacity restrictions, and a lack of suitable skilled labour in the finishing trades in particular. An immigration law that specifically focuses on bottlenecks in the labour market could help to bring about some relief. If it becomes obvious over the next few months that construction growth is going to remain sluggish long term, rent control should not be implemented in the regions. [more]
April 20, 2015
29
In Europe, Switzerland and Germany have long trailed at the bottom of the league in terms of residential ownership, despite increases versus the 1990s. The reasons for this are complex: both countries have a relatively well developed rental market – to some extent the reason for and the consequence of the lower owner share. [more]
September 2, 2014
Region:
30
German GDP only 1 ½% in 2014, considerable risks for 2015. We have scaled back our GDP forecast for 2014 from 1.8% to 1 ½%, as we now expect weaker growth in H2. This also reduces our forecast for 2015 from 2.0% to 1.8%. The risks that this still constitutes an overly optimistic forecast have increased significantly. The German investment cycle will likely be more subdued than expected due to the ongoing weakness of world trade and increasing geopolitical strains. Even the hitherto still robust private consumption is emitting its first warning signs. [more]
January 27, 2014
Region:
31
We see economic growth in the order of 1.5% this year. Continuously strong private consumption and a rise in investment in machinery and equipment for the first time in two years are expected to lay the foundation for this solid performance. Moreover, we expect net exports to rise slightly as well in light of a global economic recovery. The labour market will remain a fundamental pillar of domestic demand also in 2014. With oil prices still relatively stable and tame domestic price developments, we expect the rate of inflation to come in at roughly the pre-year level of 1.5% on average in 2014. After a nearly balanced public-sector budget in 2013 a slight surplus seems to be in store for 2014, and public debt will likely fall in the direction of 76% of GDP, down from 81% at the end of 2012. [more]
October 31, 2013
Region:
32
Recently, the labour market has been marked by rising unemployment alongside a sustained increase in overall employment. The surprisingly strong increase in unemployment in September was reported by some newspapers as a "stalling German jobs miracle". The labour market upswing is still intact. Leading indicators suggest that the increase in employment is likely to accelerate again towards year-end. We expect the number of persons in employment to rise by 230,000 to a record high of 42.3 million in 2014. [more]
6.7.5