Optimism for the German property market has been increasing as economic growth forecasts are being revised upward with jobless figures falling, with the country’s real estate climate increasing by 8.5%, according to King Sturge’s Real Estate Economy Index.

This is based to a large extent on rental income, as it mirrors the expectations in regard to rent and income trends, which rose by 9.2% in October 2010. The Investment Climate, being the second sub-indicator of the Real Estate Climate, similarly showed accelerated growth at 7.7%.

Sascha Hettrich, managing partner of King Sturge Deutschland, said: “To be sure, we have every reason to rejoice not just over the ‘sensed’, but also over the indeed positive market development, and yet we would like to caution against exaggerated expectations. After all, it is much too early to speak of a boom in the real estate industry. Rather, we are seeing a successive return to a normal situation that is showing no signs of renewed hype. To put it differently: Having become gradually gotten mired in general agony, the sector is no longer stepping on the brake but on the accelerator – some players more cautiously than others, depending on their assessment of the risks and opportunities.”

The majority of sectors in the property market saw gains with the office market returning a sizable increase of 12.8%, however the residential sector saw a small decline of 0.7%

Hettrich cautioned: “The economic development in Germany is admittedly showing fast-paced and amazingly dynamic growth at the moment, yet it remains strongly dependent on trends in the industrial and financial markets worldwide. And it is here that fears of a cooling economy in the United States, China, and the European debtor countries are mounting. As it were, the aftershocks of the crisis continue to be acutely felt.”