ECB policy biggest risk for real estate market - Conference
The third outing of the Jahreskongress Finanzierung für die Real Estate Industry took place at the end of April, this time for the first time in Berlin after two previous stagings in Frankfurt am Main – perhaps in itself a statement about the coming-of-age of Berlin as a serious alternative to the financial capital as a weighty centre for real estate-related gatherings.
The attendance of 220 was nearly double that of the earlier outings, fully justifying the commitment of its organisers, financing specialist BF.direkt AG and communications agency RUECKERCONSULT. Steering the event through the day was Professor Dr. Steffen Sebastian of the IREBS business school, with the conference focusing on three different key themes: the financial policies of the European Central Bank, financing and pricing on property markets, and digitalisation.
In her opening keynote speech, Professor Dr. Isabel Schnabel from the University of Bonn and a key government advisor reminded the audience of the side effects of the current loose monetary policy being practiced by the Bank. The ECB's actions are weakening the resolve for reform and the need for consolidation in the eurozone countries, which carries with it risks for financial stability, she stressed. To talk of a shift in policy, or a meaningful reduction in the Bank's bond buying program, is still far from reality, although it remains as critical as ever. However, even small changes in the interest rate could have disproportionate effects on the real estate industry, she cautioned.
A lively panel discussion ensued, with Dr. Matthias Hanten of Deloitte Legal, Hans Jürgen Kulartz of Berliner Sparkasse, Dr. Alexander Schätz of HypoVereinsbank, Stefan Schilbe of HSBC Trinkaus & Burkhardt, and Patrick Walcher of LBBW. Schilbe reminded us that the massive debt overhang of the pre-crisis era has still not ben resolved. German real estate prices are not abnormally high in a historic context, several agreed, while Dr. Schätz warned about rising challenges for all players the longer the property boom in Germany continues.The second block of the day dealt with the property market itself, and its underlying financing. New financing and investment vehicles were discussed by Prof. Dr. Michael Becken of Becken Invest GmbH, Francesco Fedele of BF.Direkt AG, Claudia Hard of lawyers Greenberg Traurig and Rene Hoepfner of LaSalle Investment Management.
All agreed that the role played by alternative financing instruments would only increase – Hoepfner of LaSalle highlighted the attractions of Mezzanine Capital from an investor's perspective, with yields less under pressure than those on senior loans. Claudia Hard of Greenberg Traurig pointed to the volume of new debt funds currently being structured and waiting in the pipeline, with Luxembourg the main beneficiary.
Matthias Hartmann, CEO of IBM for German-speaking Europe, focused in his talk on the exponential growth of data processing capacities as a basis and accelerator of further digital progress. "The expected further doubling of data processing capacity every two years means that, in the not-to-distant future, all human knowledge will reside in the Cloud, he said. Three core technologies, in his view, will drive development forward: Blockchain, Artificial Intelligence and Cloud Technology. "At the moment there is no technology other than artificial intelligence which is being more speedily put in to practical use", he said.
Again, a lively panel discussion followed, with participants Gero Bergmann of Berlin Hyp, Jürgen Fenk of SIGNA Holding and Barbara Knoflach of BNP Paribas Real Estate. Fenk commented on the fact that each bank was trying to deal with these changes in its own way, rather than working on developing a platform to really leverage the possibilities of the emerging technology. Gero Bergmann of Berlin Hyp said there would still be a need for the classical banks, but solutions would arise from a combination of traditional banking and new start-ups/proptechs. Barbara Knoflach was convinced that even the most complex forms of financing would be available at the push of a button in the near future – "Blockchain has the potential to turn the entire business models of the banks on their heads", she said.