a lot is currently going on the financial, capital markets and thus also in the real estate markets. Interest rate turnaround, record inflation figures (9.1% in August), fears of recession "in the fall" and a decline in transaction volumes in Q2 and certainly also in Q3 2022. However, hopes for a significant upturn in transaction activity in Q4 are justified. Let no one - especially from the real estate industry - say that things came as a surprise. Nevertheless, when looking at the individual figures, it should not be forgotten that an unprecedented market phase, fed by ongoing stimuli from central banks and rising demand, is undoubtedly causing an end of a special boom for the real estate industry. But it will continue, that much is certain:
- In a relative comparison of asset classes, Alternatives / Real Estate continue to perform very well. We also do not expect a structural withdrawal of investors from the asset class real estate.
- At the operational level, i. e. at the property level, there is nevertheless an increasing differentiation: as a result of changed risk parameters for so-called special properties such as data centres, logistics or, on a larger scale, retail, a new pricing is taking place. These effects are currently most strongly measurable in development / project development.
- However, the strong increase in real estate debt in recent years also shows that loan funds have become an increasingly important financing instrument on the European market. Here, too, traditional structures continue to break down.
In the current issue of Catella Finance Focus we would also like to provide an overview of the current interest rate landscape in the "Catella countries" based on the following indicators
- Harmonized Consumer Price Index (HICP) July 2022: Average of selected "Catella Countries": 9.08% (Total Euro Area: 8.9%)
- Interbank interest rate for 3-month funds: Average selected "Catella countries": 1.14% (total euro area: 0.43%)
- Interest rate government bond 10 y.: average of selected "Catella countries": 2.16% (total euro area: 1.91%)
- Interest rate government bond 10 y. year-to-year change in basis points: Average of selected "Catella countries": 203 bps (total euro area: 199 bps).
For example, for the 10-year government bond, the bandwidth ranges from 0.43% in Switzerland to 1.72% in Finland and 6.37% in Poland.
But what can we expect? The high inflation in the euro area is system-changing because the European Central Bank will decide on future key interest rates next week. Almost daily, members of the ECB Governing Council are commenting on what they think the next move should be. A move of 0.75 percentage points is considered relatively likely, if one follows the sentiments and statements.
Therefore, enjoy the current analysis - but read quickly, because after Jackson Hole, is before the next interest rate step in September.
Prof. Dr. Thomas Beyerle