Despite a recent upward trend in the outlook for the German economy, in December 2010 there was a fall of 1.6% in King Sturge’s Real Estate Climate report, which is a second monthly decrease. The Investment Climate also dropped, by 2.1%, with rental income cooling with a 0.9% fall.

Sascha Hettrich, Managing Partner of King Sturge Deutschland, said: “The property downturn is a little more pronounced this time than it was the month before, but the level remains high then as now. In December, the levelling out of the seeming euphoria of recent months is explained primarily by the decline in investment sentiment.”

Hettrich continued: “At the moment, certain signs suggest that the sentiment is levelling out, which is an unavoidable and at times even sensible thing to do. After all, the Real Estate Climate climbed from one peak to the next between July and October 2010. An unchecked continuation of this surge would be less than sound. And even in December, the level had topped the level seen back in January 2008.

“Moreover, the majority of market players have continued to award positive ratings to the Real Estate Climate with its sub-components Investment Climate and Rental Income, as well as to all the segment climates. To be able to say with any degree of certainty whether this does indeed mark the turnaround, we will have to wait and see what the coming months might bring.”