Real Estate
Analyses of the situation in the construction sector and studies on the real-estate market both in Germany as a whole and in selected centres in Germany and abroad.
German construction: Robust investment, but price momentum slowing
Scarcity of supply is the key attribute of the current German real estate cycle. It seems likely to persist in the years ahead. House prices still have the biggest potential in the real estate market. Completions are on the rise and construction investments should continue to grow strongly in 2014 and 2015. Construction investments should also rise in the public and the commercial sector...(go to p. 8) [more]
Talking Point
Outlook on the German housing market
In 2013, German house prices continued to increase at a rapid pace. On average, residential property prices gained more than 6% as apartment prices rose by more than 7%. Prices for single-family houses and terraced houses grew at nearly 5%. The price dynamics varied strongly. Among the 125 most important cities (BulwienGesa), twelve reported price increases exceeding 10%, compared to only seven cities in 2012, one in 2011, and none in 2010 and 2009. [more]
Real estate
Optimal German real estate portfolios
City data shows that the efficient frontier of multi-asset portfolios improves if real estate investments are taken into account. The increasing prices in the last years made German real estate investments appear even more attractive. We show that secondary cities which are often not in the focus of investors can help to improve the efficient frontier of portfolios. Moreover, an investment mix in apartments, retail and office is regularly more efficient than residential-only or commercial-only investments. If stricter rent controls are implemented and apartment yields decline, the commercial market may be an attractive alternative for German portfolios... (go to page 24) [more]
Housing market
Many euro area housing markets are still mean-reverting
Following up on our analysis in July 2012, we revisit the adjustment of house prices of eleven euro area countries. Our analysis of prices and affordability show that mean-reversion back to historical averages of affordability ratios continued in many countries – but is not yet complete. Adjustment is most pronounced in Ireland and Spain. In these countries, house prices could be bottoming out. German affordability ratios are also mean-reverting since 2009. However, prices are on an upward trend and affordability ratios are still below the historical German average which implies that German houses remain affordable relative to its history. [more]
Spotlight on Germany
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