In Germany ‘do more in 2024’ rather than ‘survive until 2025’
The German market has had a difficult time but it still offers a lot of opportunities, experts agreed at Real Asset Media’s Germany Investment briefing, which took place recently at JLL’s London headquarters.
“The market has taken such a hard correction that it’s opened up opportunities, as prices are at a level we haven’t seen for over ten years”, said Rainer Nonnengässer, Senior Managing Director, Head Germany & Netherlands, AMRO Partners. “My mantra is ‘do more in 2024’ rather than ‘survive until 2025’. There’s a lot to be done now’.
Germany’s residential market has been the hardest hit in Europe, with prices falling by 22%, compared to single-digit declines in France or Spain, and the downturn has affected top locations as well.
The crisis in this and other sectors means there is less competition in the market as many players choose to sit on their hands and wait for developments.
“Some types of investors will remain on the sidelines for a while yet”, said Jan Eckert, CEO Switzerland & Head of Capital Markets DACH, Jones Lang LaSalle. “Insurance companies, for example, are very cautious about expanding their real estate allocations”.
On the positive side, “we’re seeing foreign money coming in again, and foreign investors are looking at bigger assets as well, which is very good news”, said Markus Beran, Head of Origination International Investors, Berlin Hyp. “We expect there will be more transactions going forward.”
Although activity is subdued, there are many off-market transactions and deals bubbling under the surface.
“Sellers want the liquidity even if they are not in distress”, said Rebekah Tobias, Managing Director Investor Relations & Business Development, Marcol. “They prefer to deals off market because they don’t want to let it be known what prices they are selling at”.
Lower prices and less competition in the market are not the only reasons to invest in Germany now. Another is the near-certainty that there will be massive undersupply in the market in the next few years when demand picks up, as developments have ground to a halt and the pipeline is extremely limited.
“Germany has been suffering, but it’s still the third biggest economy in the world”, said Eckert. “At some point the engine will power up again, the recovery will come and then there won’t be enough real estate”.
