pbbIX falls to 0.50 points in 1st quarter 2020

  • Further slowdown expected in the second quarter for rental and investment markets

Munich, 29 May 2020 – The pbbIX real estate index for the 7 largest office markets in Germany fell to 0.50 index points in 1Q2020, having risen slightly in the previous quarter to 0.83 points. The economic situation on the office markets has fallen to its lowest level since 4Q2012, but remains in the area of growth. This slowdown is a result of the weaker macroeconomic development resulting from the COVID-19 pandemic. In the first quarter, the macroeconomic development fell by 2.2% com-pared with the previous quarter; a higher decline is expected for the second quarter.

Looking at the bare figures, at the end of March the office property markets had not been adversely affected by this development. Overall, the rental and investment markets posted a solid start to the year. Whilst letting performance was weaker than the same quarter in the previous year, the percentage of unlet office properties remained low. Cash inflows during the period under review were above (and initial yields below) the same figures for the first quarter in 2019.

All this will change in the second quarter, as the office property markets follow the macroeconomic development. Given the pace of the current recession, this delay will be rather short. As the economic downturn is the result of the special circumstances surrounding the COVID-19 pandemic (instead of originating from the economy itself), a swift recovery could be possible once the pandemic has been overcome. 

Only for Munich, the economic situation on the office property market remained stable in the first quarter 2020 with a constant pbbIX value of 0.63 points, whereas all other individual markets recorded more or less significant declines. The pbbIX continues to show Dusseldorf as having the strongest economy. 

The Q1 report is available at pbbIX.com.

Notes to the editors:

The pbbIX (pbbix.com) index family comprises a composite index, as well as seven sub indices tracking the key German office property markets of Berlin, Cologne, Dusseldorf, Frankfurt/Main, Hamburg, Munich and Stuttgart, including their respective catchment areas. 

pbbIX describes the development of the office markets. The zero line corresponds to the long-term trend. If the index is above the zero line, the office market is better than the long-term average. From a value of 1.0 points, one speaks of a boom.

The indices, which pbb publishes in cooperation with vdp Research, provide investors and lenders with comprehensive information on the current performance of office properties in Germany.

pbb Deutsche Pfandbriefbank (www.pfandbriefbank.com) is a specialist lender for commercial real estate finance and public investment finance in Europe and the United States of America.

Walter Allwicher, +49 89 2880-28787, walter.allwicher@pfandbriefbank.com