Sentiment in Commercial Real Estate Financing Continues to Worsen
DIFI Report by ZEW and JLL
The downward trend of the German Real Estate Financing Index (DIFI) of ZEW and JLL continues in the first quarter of 2020. The index fell 3.7 points to a level of minus 18.9 after the surveyed experts again gave a worse assessment of the financing situation both for the past six months as well as for the coming six months. Only the sub-indicators for stationary retailers show a clear improvement, but still remain in negative territory.
When asked about the importance of sustainability aspects such as green building certification and ESG (environmental, social and governance) criteria for property financing, the survey participants considered that these aspects have a medium to very strong influence on investment and financing decisions and the market value of a property. These are the key findings of the DIFI Report, a quarterly survey on the commercial real estate financing market in Germany carried out by ZEW in cooperation with JLL.
The German Real Estate Finance Index (DIFI)
The German Real Estate Finance Index (DIFI) reflects survey participants’ assessment of the current situation (including the previous six months) of and expectations (for the coming six months) for the commercial real estate financing market. It is conducted on a quarterly basis and calculated as the average value of the balances between the following segments: office, retail, logistics, residential properties and hotels. The balance for each segment is the difference between the percentage of participants who are optimistic and the percentage of participants who are pessimistic about the current state and future development of financing conditions in the German real estate market. The DIFI is a survey conducted and published by Jones Lang LaSalle (JLL) and the ZEW – Leibniz Centre for European Economic Research. 24 experts participated in the February 2020 survey.
