EXPO Real: German deals pause as uncertainty increases

Economic uncertainty, fuelled by the energy crisis, is hitting the German market hard, delegates heard at Real Asset Media’s Germany Investment briefing, which took place at the International Investors Lounge at EXPO Real.

“There’s still a lot of interest in the German market but there is no capital being invested,” said Tobias Schultheiß, managing partner, Blackbird Real Estate. “Last year there was a stable deal flow, but this year there are almost zero deals.”

Institutional investors and traditional core buyers are sitting on their hands, while opportunistic investors and private equity companies are being more active.

“Transaction volumes are definitely lower but there are a lot of off-market deals happening,” said  Rebekah Tobias, MD, investor relations and business development, MARCOL. “Family offices and other cash buyers are taking advantage of the opportunities, while it is harder for traditional core buyers to find the right deal.”

However, investors know that the long-term fundamentals of the German market are positive, so even if they are not closing deals this year they are likely to stick around.

“There has been a decline in buying activity recently, but Institutional investors should be ready for the rebound which will come in 2023,” said Alexander Lehnen, public accountant, tax advisor and partner at Arnecke Sibeth Dabelstein.

Residential is one sector that has been particularly affected by recent events, Rents are rising and demand is increasing, yet developments have virtually stopped.

“Resi developments have been funded by foreign equity and the drastic rise in interest rates has stopped that,” said Rainer Nonnengässer, executive chairman, International Campus. “Also subsidies for multifamily have disappeared overnight so developments have been scaled down signficantly.”

As there will be little to no growth on the supply side while demand is expected to grow further, “double-digit rental growth in multi family is set to continue”, said Rainer Nonnengässer.

[Images: Sabine M Mairiedl, Munich]