German real estate market players are facing the new year with plenty of optimism, according to King Sturge. Although sentiment in the industry had suffered a slight damper toward the end of last year, the survey-based Real Estate Climate of the monthly King Sturge Real Estate Economy Index returned a new high-water mark in its latest January poll among 1,000 market experts.

A 5.2% increase propelled it to its current level of 141.8 index points (previous month: 134.8), more than compensating for the slight dips of recent months. The new surge is riding the wave of success reports from the letting and transaction markets. The Rental Income, for instance, which indicates expectations for rent and income performance, rose by 6.4% to 137.7 index points (up from 129.4 the month before). The Investment Climate, reflecting the sentiment concerning acquisitions and investments, climbed from 140.2 to 146 index points.

'The transaction markets have clearly revived and already regained their pre-crisis levels,' observed Sascha Hettrich, managing partner of King Sturge Deutschland.

'Even the prospects at the real estate economy basis are comparatively favourable for 2011. Purchase prices and rent rates on the commercial real estate markets show a stable tendency. The one thing missing are premium properties, at least in the prime locations of Germany's conurbations that are so much in demand. Given the high pressure to invest, e.g. among institutional investors, a certain trend toward secondary locations is beginning to emerge, and depending on the conditions of a given micro-location, these are not necessarily less attractive than the preferred core real estate.'