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.
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.
PwC Real Estate Index (-2.5%) - Residential takes a break in December after strong upswing in recent months
In December 2024, the PwC Real Estate Indices for residential and commercial property holders decreased. While the index for residential property holders declined by -2.5% on average to 172 points, the index for commercial property holders dropped by -3.7% during the same period, reaching 204 points. The EBITDA multiples for Residential (27.1x) have increased slightly compared to the previous quarters. In contrast, the EBITDA multiples for Commercial (17.6x) have reached a lower level. This trend can also be seen in the indices.
In recent developments, Germany's housing market is seeing significant shifts influenced by political proposals, including a suggested rent freeze until 2030 in select regions and a push for enhanced social policies. These measures could impact the valuation levels of listed real estate companies and alter market dynamics. With over 30,200 evictions reported in 2023 due to rent arrears, there's increasing pressure for stronger tenant protections, which could further affect the capital market landscape for residential real estate.
Stock price data per company within the respective peer group is collected using the S&P Capital IQ Data Idem „IQ_ClosePrice_Adj“. Capital IQ defines the Close Price as: The closing price of the day, calculated once per day after the market close. Close prices are adjusted for stock splits, cash dividends, rights offerings, and spin-offs. The underlying peer groups are revised and adjusted once per year on 31 December. New players on the German real estate market are thus identified and included, while delisted companies are excluded.
“Reliable benchmarks are key for every investor in order to balance the information asymmetry in a real estate investment process.”
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.
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.
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).
In order to gain insight into the changes in value of 17 major players in the German real estate market, we have analysed the sector-specific Real Estate KPIs FFO 1 and EPRA NTA from the financial periods FY2022, FY2023 and TFQ2024 (TFQ: Trailing Four Quarters). We have put the share prices as of the balance sheet dates 31 Dec 2022, 31 Dec 2023 and 31 Dec 2024 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.
The table below shows the individual FFO 1 multiples and Price/EPRA NTA ratios of our peer group by segment. The key figures relate to the financial periods FY2022, FY2023 and TFQ2024 and the share prices as of 31 Dec 2022, 31 Dec 2023 and 31 Dec 2024.
Reading example: TAG Immobilien AG was valued by the market at 13.5x of its FFO 1 as of 31 Dec 2023, whereas on 31 Dec 2024, it was valued at 14.9x of its FFO 1.
Compared to the end of FY2023, Commercial's current valuation level (as of 31 Dec 2024) has decreased by -0.8% (FFO 1 multiple) and -0.7% (Price/EPRA NTA ratio). On the other hand, the current valuation level of Residential has increased by +8.4% (FFO 1 multiple) and +7.5% (Price/EPRA NTA ratio).
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.