Real estate: German residential

The German residential market had again an excellent year in 2017. For the fourth consecutive year it outperformed significantly its pairs and the Europe market in general. If we look at the stock market performance of the FTSE Epra/Nareit Germany, the FTSE Epra/Nareit Developed Europe and the Stoxx Europe 600 since 2014, the German real estate market has outperformed its direct pairs by +83.52% and the global market by +108.28%.

This positive evolution is mainly explained by the fact that the German residential market is unbalanced, with the offer well below the demand. As a result, property owners have a strong negotiation power and can hence easily increase their rents. This unbalance should remain medium term as construction costs in Germany are extremely high, which does not encourage the development of new buildings.