  (Abriged) We present a measurement of the evolution of the rest-frame K-band
luminosity function to z ~ 1.2 using a sample of more than 5000 K-selected
galaxies drawn from the MUNICS dataset. Distances and absolute K-band
magnitudes are derived using photometric redshifts from spectral energy
distribution fits to BVRIJK photometry. These are calibrated using >500
spectroscopic redshifts. We obtain redshift estimates having a rms scatter of
0.055 and no mean bias. We use Monte-Carlo simulations to investigate the
influence of the errors in distance associated with photometric redshifts on
our ability to reconstruct the shape of the luminosity function. Finally, we
construct the rest-frame K-band LF in four redshift bins spanning 0.4<z<1.2 and
compare our results to the local luminosity function. We discuss and apply two
different estimators to derive likely values for the evolution of the number
density, Phi*, and characteristic luminosity, M*, with redshift. While the
first estimator relies on the value of the luminosity function binned in
magnitude and redshift, the second estimator uses the individually measured
{M,z} pairs alone. In both cases we obtain a mild decrease in number density by
\~ 25% to z=1 accompanied by brightening of the galaxy population by 0.5 to 0.7
mag. These results are fully consistent with an analogous analysis using only
the spectroscopic MUNICS sample. The total K-band luminosity density is found
to scale as dlog(rho_L)/dz = 0.24. We discuss possible sources of systematic
errors and their influence on our parameter estimates.
