EXPO REAL round-up

by

Markets

EXPO REAL got off to a cracking start again this year, with more than 44,500 visitors descending on the fair, in a sign that Europe’s real estate boom is still going full throttle.

‘EXPO REAL 2018 reflects the boom in property markets and set a new record for companies, cities and regions at the fair,’ said Klaus Dittrich, chairman of the board at Messe München.

Such is the strength of demand for German real estate that many in the industry are predicting a new investment record will be set this year. ‘EXPO REAL 2018 has underscored the confidence in the sector,’ said Timo Tschammler, CEO of JLL Germany. ‘Germany’s record investment of €56.8b last year could be exceeded with a strong final quarter. The market is particularly robust at the moment and proving to be unaffected by political debates, trade wars or global election results. As a result, we have upped our forecast for the year. Given that the market is usually very active in the last three months, and the expectation that some of the many transactions still in the negotiation phase will go through in the final weeks of the year, a transaction volume of up to €60b seems possible.’

Demand in the market remains incredibly high, according to Guido Nabben, spokesman for German Property Partners (GPP): ‘Large amounts of liquidity are still available and we have registered a high amount of demand for suitable premises to rent and to buy,’ he said. ‘To find premises that are just right for potential tenants and purchasers, expertise in the local market is more important than ever before. In what is at present a challenging market environment that is defined by the ever-present lack of offers, personal contacts and networking with interesting potential tenants or purchasers is vital for successfully closing deals. Despite the wave of digitalisation, the property services business remains a people’s business.’

Digitisation was a major topic at EXPO REAL this year, as its importance in the sector grows. ‘You couldn’t avoid the topic this year,’ said Sascha Klaus, chairman of the board at lender Berlin Hyp. ‘The many innovations at the exhibition stands and on the panels are pointing the way to the real estate industry’s move towards digitisation. With our strategic investments in Berlin's PropTech 21st Real Estate and BrickVest as well as our new product OnSite ImmoAgent, we are making great progress towards digitization. We aim to offer additional value to our customers with our activities and to support the real estate industry on its way to digitisation.’

Nonetheless, despite the buoyant mood at the fair, scepticism is rising, according to Oliver Zimper, managing partner, co-CEO and CIO at real estate investment manager NAS Invest: ‘Are we at the pinnacle of high prices, or are we instead going to experience sustainable change in the price cycle?’ he asked. 'There’s no clear answer to this question at the moment. In the meantime, the rallying of investments continues – though market participants should be flexible enough to react to spontaneous market changes quickly. A “black swan” could happen at any time.’

Besides, as Tschammler pointed out, even in strong market phases, foresight and sound judgement are essential: ‘It’s conceivable that interest rates in Europe will go up, albeit not rapidly,’ he said. ‘At the same time, there are signs of muted economic growth regarding construction capacities in Germany. That requires strategy, precise market knowledge and independent judgement so that a new record year isn’t followed by a “nasty surprise” at EXPO REAL next year,’ he warned. (ssk)