Outlook 2022 - Online Roundtable on 8th December 2021

The expert panellists on the recent REFIRE and Targa Communications online roundtable looking at the outlook for 2022 agreed that, as investors look for hot asset classes, they are expecting strong interest in different market sectors.

At the final roundtable of the year, 'Outlook 2022. What will be hot, and what will not?', four industry experts provided attendees, from 15 different countries, with their insights into the challenges and prospects for real estate investment in the coming year. All four speakers were in agreement that investors will be looking at different areas of the market to find opportunities in 2022.

As well as considering their expectations and thoughts regarding the key asset classes of residential, retail, office, logistics and healthcare, the panel also discussed the implications of ESG on the industry.

“We saw the rise of the residential sector over recent years, and there is still a lot of the demand and enough liquidity in the market. But we have a problem with the procurement of building materials and the speed of construction permits”, said Diane Becker, CEO at Catella Property Consultants.

“There are many investors who have the in-house knowledge to handle ESG challenges. There are a lot of properties that need to be managed to green. They need both knowledge and money to be upgraded,” she added.

Holger Hosang, Managing Partner at Sonar Real Estate stated his opinion that “ESG is THE driving issue of the moment. Every investor is asking about that topic and how we handle it. But we must think not only about the E, but also the S and the G too, and how we measure it.”

Sabine Geuss of Principal Real Estate Europe agreed with this view, observing that every aspect of real estate is now touched and influenced by ESG.

While logistics has been one of the hot asset classes of 2021, if not the hottest, Holger Hosang expressed concerns over the sector’s prospects. “With the exception of the last-mile sector, the logistics market is not only hot, but it is also already overheated,” he said.

Patrick Brinker, of Hauck & Aufhäuser agreed with the sentiment and stated that, with the exception of last-mile logistics, he was not sure if the logistics sector would remain ‘hot’ over the in 2022.

Diane Becker commented that, with manufacturing and other industries showing strong signs of recovery, storage is becoming a challenge, observing “it’s not just about pure logistics.”

The panel agreed that the residential market would still be hot in 2022. Hauck & Aufhäuser’s Patrick Brinker suggested that investors will be looking at different areas of the market to find opportunities in 2022. “Residential real estate will continue to be interesting for institutional investors in the coming year. The question is, however, which sub-asset classes will come into focus?” he asked.

Turning the focus of the conversation to the office market, the panel were in agreement that Covid-19 restrictions mean that there is uncertainty over future prospects for investors and that location and adaptability of office properties could be the key to success.  “Laboratories combined with offices may not be hot yet, but they are on their way,” said Holger Hosang.

Hosang also thought that the nature of some retail properties would also evolve suggesting that shopping centres may not be 100 per cent retail assets in the future and that they would become more “mixed-use” over time.

The panel discussed other sectors and agreed that, among other alternative asset classes, data centres were likely to be “in the focus of investors” in 2022.

Sabine Geuss of Principal Real Estate Europe also highlighted the challenges and opportunities in the healthcare market and observed that while it is considered as a crisis-proof investment, with high demand, the sector has its own submarkets and that not all assets have the same levels f attraction to investors. “Acute clinics are hot; rehabilitation clinics are not,” she said and pointed out that many residents of tomorrow's care and healthcare properties will have different needs than those of today.

A snap poll conducted among delegates at the roundtable showed that 56% of respondents believe that industrial/logistics sector will be the hottest asset class in 2022 and only 2% think the leisure branch will be attracting the investments.