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Real Estate Monitor

PwC‘s Real Estate Institute

Real Estate Capital Market KPIs – updated every month for you

Our PwC Real Estate Monitor provides you with a range of monthly derived Real Estate Capital Market KPIs. Our analyses are based on major listed German Real Estate Companies and provide you with sound insights into developments in the real estate industry.

Your contact person

Dr. Patrick Lehmann

Dr. Patrick Lehmann
Senior Manager at PwC Germany
Tel.: +49 30 2636-5304

The Real Estate Industry

With more than 20 percent of national income before the automotive and engineering industries, the real estate industry is one of the largest economic sectors in Germany. The dynamic business environment opens up new growth opportunities, but also brings with it new challenges and risks. Market participants must ensure that they anticipate developments in the markets at an early stage. Therefore, their success depends to a large extent on valid market information. PwC's Real Estate Monitor provides monthly information on key capital market benchmarks that highlight current trends in the real estate industry.

Real Estate Monitor November (PDF, 0,4 MB)

„Reliable benchmarks are key for every investor in order to balance the information asymmetry in a real estate investment process.“

Dirk Hennig,Partner at PwC Germany

Real Estate Benchmarks

PwC Real Estate Index

The Index shows the development of respective peer group (residential and commercial) companies’ stock prices on a monthly basis. Stock price data per company within the respective peer group is collected from S&P Capital IQ and reflects the closing price of the day after adjustment for stock splits.

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The WACC is the rate of return required by investors (both debt and equity) taking into account the systematic risk characteristics inherent in the business. The derived WACC is an average value of a peer group of German listed real estate companies as well as its global counterpart.

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EBITDA Multiple

The EBITDA Multiple is a financial indicator that relates the enterprise value of a company to its EBITDA. We have derived the EBITDA Multiple based on last twelve month available EBITDA and the capitalized value for each company within the peer group (residential and commercial).

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Real Estate KPIs

Residential's market-based valuation level is below last year's level

In order to gain insight into the changes in value of 19 major players in the German real estate market, we have analysed the sector-specific Real Estate KPIs FFO 1 and EPRA NAV from the financial periods FY2019, FY2020 and TFQ2021, i.e. Q3 2020 to Q2 2021 (TFQ: Trailing Four Quarters). We have put the share prices as of the balance sheet dates 31 Dec 2019, 31 Dec 2020 and 31 Oct 2021 in relation to the above-mentioned key figures from the corresponding financial periods. The resulting average ratios by segment are shown in the figures below.

FFO 1 multiples and Price/EPRA NAV ratios by segment

The table below shows the individual FFO 1 multiples and Price/EPRA NAV ratios of our peer group by segment. The key figures relate to the financial periods FY2019, FY2020 and TFQ2021 and the share prices as of 31 December 2019, 31 December 2020 and 31 October 2021.

Reading example: Vonovia was valued by the market at 25.1x of its FFO 1 as of 31 December 2020, whereas on 31 October 2021 it was valued at 21.0x of its FFO 1.

Residential's valuation level is below previous year's level, Commercial slightly above

Compared to the end of 2020, Commercial's current valuation level (as of 31 October 2021) has increased by +9.8 percent (FFO 1 multiple) and +7.9 percent (Price/EPRA NAV ratio), while the current valuation level of Residential has decreased by -9.3 percent (FFO 1 multiple) and -8.6 percent (Price/EPRA NAV ratio).

Compared to the last edition of this monthly newsletter, the valuation level of Residential has decreased in particular, based on both the FFO 1 multiple and the Price/EPRA NAV ratio. For Commercial, on the other hand, the valuation level has risen.

Risk free rate

The chart below illustrates the risk-free interest rate relevant for the derivation of the WACC over time, starting on 31 December 2013. The derivation is based on Bundesbank data in accordance with the methodological recommendations of the IDW.

In most economies, risk-free interest rates have dropped to historically low levels in recent decades. They are particularly important because they are the basis for the determination of other interest rates and thus affect financing conditions in the economy.

On 31 December 2013, the risk-free interest rate was still 2.75 percent. Since then, the rate has continued to fall and was even below the 0 percent threshold a few months ago. One of the main reasons is the central banks' expansive monetary policy. Due to rising inflation rates in recent months, the US Federal Reserve has meanwhile initiated a turnaround in monetary policy (tapering). Accordingly, it wants to successively reduce its multi-billion bond purchases. Consequently, also interest rates could rise again in the future.

Previous Issues

Disclaimer (important notice): This publication includes information obtained or derived from a variety of publicly available sources. PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft does not give any representation or warranty of any kind (whether expressed or implied) as to the accuracy or completeness of this publication. This publication has been prepared solely for general informational. Nothing in this publication should be construed as individual advice. Before making any decision or taking any action, you should consult the sources or contacts listed here. The graphics may contain rounding differences.

Contact us

Dirk Hennig

Dirk Hennig

Partner, PwC Germany

Tel: +49 30 2636-1166

Dirk Kadel

Dirk Kadel

Partner, PwC Germany

Tel: +49 69 9585-5583

Thorsten Schnieders

Thorsten Schnieders

Partner, PwC Germany

Tel: +49 89 5790-6448

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