Investor sentiment for German real estate and real assets from the capital flow side is still very positive according to Thomas Veith Partner, Leader Real Estate/Real Assets, PricewaterhouseCoopers.
“Allocations into our sectors are stable and even growing, but of course the sector offers a lot of opportunities for us,” he told Real Asset Insight’s Richard Betts.
“We have so many transformational processes happening: it’s about ESG, it’s about asset types, it’s about the future of office, the future of living and so on. All the trends we see bring a lot of challenges but also a lot of opportunities.”
He said that in Germany’s office sector the market is still stable, and as the development pipeline has diminished vacancy rates are low. “We even see a pick-up on the leasing side that gives a lot of stability. But in the mid to long run we see several transformational processes about the office layout, about how the home office is used and about how offices are used.”
Veith said that the other transformational change is in the living sector. “Germany is a pretty stable market and we have seen significant large transactions, especially in the listed entities sector, such as the takeover of Vonovia by Deutsche Wohnen,” he said. Meanwhile, operational living assets like student housing have grown over the last few years as has senior housing.
As residential is still seen as a really stable business it is attracting more capital. “One important consideration to make is that two years ago when Coronavirus started there was a lot of talk about how urbanisation would stop and people would move out of the cities. Now I think we have clearly seen that urbanisation is a trend that will continue into the future, so investing into residential or office space in the urban areas remains a really interesting proposition in the long run.”
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