What’s in store for property and investment in 2017?

With the year having only just begun, we are all looking ahead with excitement and anticipation. What will happen in global politics? And what will the hot trends be within the property sector in the coming year? We asked some industry experts to take a look into the future. We hope you enjoy reading what they had to say!

Brad Olsen

Brad Olsen

President, Atlantic Partners, Ltd.

 

“We expect 2017 to be a record year”

 

With reference to the content covered under your key topic “American Afternoon” at the INVESTMENT LOCATIONS FORUM 2016, we ask: What will be the key trend for 2017?

Continued low interest rates and increased competition for core properties in Germany have resulted in increased interest in US real estate on the part of German investors. We are seeing both broader and deeper interest, meaning that new investors are looking at the US, and those that already are active here are increasing their commitments to our markets. They are attracted by the depth of the world’s largest institutional property market and the prospect of further growth in the US economy. Uncertainty may temper this flow of capital, but we expect 2017 to be a record year in terms of German institutional investment in US real estate.

 

Which one adjective would you use to describe the year ahead for the property sector?

Uncertain.

Dennis Lopez

Dennis Lopez

Chief Investment Officer, AXA IM - Real Assets

 

“Alternatives as essential diversifiers”

 

With reference to the content covered under your key topic “Investment/Investment Strategies of big players" at the EXPO REAL FORUM 2016, we ask: What will be the key trend for 2017?

The 2017 investment outlook is cautious, but positive. Investors are likely to increasingly target core-plus and value-add assets that can be repositioned to core, with international diversification as a key theme. Much of that asset management activity should be in the 7/24 cities of the large, liquid markets such as the U.S, France, Germany, UK and Japan. Regardless of the property type, there is a need for a consistent investment rationale – no compromise on location. For higher returns, leasing risk, refurbishment and development in the major cities provide better opportunities versus buying properties in higher yielding second and third tier markets. For further diversification, there should be attractive investment opportunities in Alternative properties.  These properties have demand drivers with a lower correlation to the economic cycle. Consequently, investors should view Alternatives as essential counter cyclical performers.

 

Which one adjective would you use to describe the year ahead for the property sector?

Deliberate.

 

Photo: Alex Lopez

Jan Linsin

Dr. Jan Linsin

Senior Director, Head of Research Germany, CBRE GmbH

 

“All signs point toward growth”

 

With reference to the content covered under your key topic “Care Real Estate Market Germany” at the SPECIAL REAL ESTATE FORUM 2016, we ask: What will be the key trend for 2017?

 Alternative asset classes are becoming increasingly important given the current low interest rates and with returns on traditional property investments having dropped by a significant margin. The volume of transactions within the care property sector alone had mounted up to over three billion Euro by the end of 2016. This record result reveals the clear rise in interest expressed by national and international investors in this alternative property asset class in Germany. All signs point toward growth: For one thing, demographic changes are bringing about a further rise in demand for professional care services, while there is a clear lack of modern care facilities offering a combination of in-patient and out-patient care. The remedy we are looking for here is more (private) investment and less regulation. After all, private investors do not want to be restricted by the constraints of a strictly planned economic structure. Instead, they want to be able to put their capital into creative, alternative forms of care and accommodation for the benefit of those in need of care–in line with their needs and in direct response to demand on the market.

 

Which one adjective would you use to describe the year ahead for the property sector?

Exciting.

 

Photo: CBRE GmbH

Logan Smith

Logan Smith

Head of Logistics Investment for Europe at BNP Paribas Real Estate

 

“The logistics property sector has never been more exciting than it is right now”

 

With reference to the content covered under your key topic “Global Trends: Opportunities and Threats Facing Logistics Real Estate” at the DISCUSSION AND NETWORKING FORUM 2016, we ask: What will be the key trend for 2017?

 The logistics sector is continuing to expand as it tries to keep up with technological advancements and changing consumer behavior. By way of comparison, the ratio of storage facilities per capita in Europe is still only a third of that in North America. This creates exciting new opportunities for investors and tenants alike, both with regard to XXL storage halls allowing for economies of scale to be achieved as well as properties in central locations for tackling that important “last mile” before the end consumer is reached. When it comes to conducting trend analyses and selecting the optimum location, investors and tenants need to be able to rely on their extensive knowledge of the location that is at their disposal as well as on data that is of an adequate quality. With no sign of technological progress slowing down, locations that are still very much in use today may be outdated by tomorrow. The logistics property sector has never been more exciting than it is right now.

 

Which one adjective would you use to describe the year ahead for the property sector?

Dynamic.

 

Photo: BNP Paribas Real Estate

Markus Trojansky

Markus Trojansky

Managing Director of dm and Head of the Expansion Department

 

“Opportunities though regeneration of existing spaces”

 

With reference to the content covered under your key topic “Strategies of Retailers” at the GRAND PLAZA 2016, we ask: What will be the key trend for 2017?

 Retailers are set to turn their attention to integral business models, with the aim of linking up physical retail stores with digital sales platforms in an effective way. There are two additional aspects that will become more significant over the course of this year: With a number of textile retailers set to give up their prime locations, new store-based sales opportunities will open up for essential goods. Plus, we will have to deal with more stringent sustainability requirements enforced by politics and in turn our landlords.

I expect to see more of a focus on prime locations and anticipate challenging approval processes for big retail centers in suburban areas, with hardly any opportunities opening up for new centers. The best chance of gaining market shares is going to be by looking to regenerate existing spaces. Here at dm, we have been continually investing in existing rental properties for years now and witnessing sustainable, organic growth as a result.

 

Which one adjective would you use to describe the year ahead for the property sector?

Promising.

 

Photo: dm-drogerie markt GmbH + Co. KG/Alex Stiebritz

Ray Mahlaka

Ray Mahlaka

Financial journalist at Moneyweb

 

"Interest in Africa’s real estate markets is growing"

 

With reference to the content covered under your key topic “Real Estate Markets in Sub-Saharan Africa” at the INVESTMENT LOCATIONS FORUM 2016, we ask: What will be the key trend for 2017?

 Global markets are increasingly becoming volatile and investors are on the search for new frontiers with lucrative opportunities. Given the uncertainty brought by Brexit and the meteoric rise of Donald Trump as USA president-elect, the search is pointing investors to the African continent.

Based on the fervent debates at the EXPO REAL Sub-Saharan Africa forum, interest in Africa’s real estate markets is growing and more investors are willing to understand the nuances of 54 countries in the continent.

Although most investors are still cautious about making real estate bets in Africa, those ready to invest need to take a long-term view. African countries will face a raft of challenges in 2017 including currency volatility and weak economic growth as a result of the slowing commodity cycle.

 

Which one adjective would you use to describe the year ahead for the property sector?

Challenging.

 

Photo: Desiree Swart/Moneyweb

Andreas Mattner

Dr. Andreas Mattner

President of the German Property Federation (ZIA)

 

“Political uncertainty calls for a joint effort”

 

With reference to the content covered under your key topic “Commercial Property and Investments" at EXPO REAL 2016, we ask: What will be the key trend for 2017?

 As an industry event, EXPO REAL 2017 is the perfect place to get an idea of the current trends within the industry as well as a fantastic opportunity to come together with the industry as a whole to discuss the latest political plans and the impact they have on the sector. This year, the trade fair will be held at an extremely tense time in politics, as the German parliamentary elections will have been held by then and coalition negotiations are likely to be underway. Whether we are talking about climate protection, affordable housing and construction, the economic climate, or the underlying tax situation–in view of the continued tension on the property markets, the ever-increasing interest being expressed by investors, and the overwhelming sense of political uncertainty, all of the stakeholders involved need to pull together in a joint effort to develop and manage our towns and cities in a sustainable way with their sights set firmly on the future. This is where EXPO REAL comes in as a crucial source of inspiration and a driving force.

 

Which one adjective would you use to describe the year ahead for the property sector?

Groundbreaking.

 

Photo: Anna-Lena Ehlers

Prof Dr Peter Russo

Prof. Peter Russo

Managing Director of TheFutureFactory GmbH, Munich

 

“A significant increase in disruptive pressure”

 

With reference to the content covered under your key topic “Digitization” at EXPO REAL 2016, we ask: What will be the key trend for 2017?

 What will 2017 bring us as far as digitization within the property industry is concerned? I strongly believe that this year we will be taking a huge step in terms of how “digital” we are compared to previous years.

There are three main reasons for this: 1. Companies are starting to realize more and more that digitization will be a key foundation for business going forward. 2. Expertise on the digitization of processes as well as the further integration of digital content and services for customers is spreading within companies with increasing speed. 3. New players known as “PropTechs” are starting to seem more like competition.

In my opinion, 2017 marks the start of some serious challenges for service providers within the property industry. We know from innovation research that as new technologies such as artificial intelligence, Big Data, and Web 3.0 progress, the services we have viewed as traditional up until now are being pushed out of the picture with increasing speed. The good news is that other industries have taught us how companies can react to this kind of challenge at an early stage and become the driving force for others. Now we just have to hope that the companies affected by this realize the situation they are in and take action before it is too late.

My prediction for 2017 is that investors and financial backers for properties will largly react in line with the economic climate and conflict situations within the world of politics. Service providers within the property industry are facing a significant increase in disruptive pressure and need to take the necessary precautions as a matter of urgency.

 

Which one adjective would you use to describe the year ahead for the property sector?

Optimistically-apprehensive.

 

Photo: EBS Universität für Wirtschaft und Recht, Wiesbaden

Axel Gedaschko

President of The Federal Union of German Housing and Property Associations (GdW)

 

"We must not jeopardize affordable housing"

 

With reference to the content covered under your key topic “Housing/New People in Germany: Immigration and building" at EXPO REAL 2016, we ask: What will be the key trend for 2017?

 With the German parliamentary elections to be held in 2017, we expect housing policy to continue to be a bone of contention in the year to come. The issue of affordable housing is expected to prominently feature in the parties' manifestos, with suggestions such as "new non-profit housing" already providing some indication of what is to come and other sections of regulations, including the second tenancy law package announced by the German Federal Ministry of Justice, provoking explosive political reactions. One thing that remains certain, though, is the importance of not jeopardizing Germany's affordable housing through campaigns or in an "all talk no action" political approach in the run-up to the elections. No matter what the political situation, it always comes down to the decision makers to take action in the end. They should always act with their sights firmly set on the actual economic and social situation and not according to their ideology–regardless of which party they belong to.

 

Which one adjective would you use to describe the year ahead for the property sector?

Promising.

 

Photo: GdW, Urban Ruths

Philipp Depiereux

Philipp Depiereux

Founder, Managing Director and company builder at etventure

 

“Without the CEO, digitization would be impossible”

 

With reference to the content covered under your key topic “Digitization” at EXPO REAL 2016, we ask: What will be the key trend for 2017?

 When we say that the entire life cycle of a building–from the planning and design stages to the management–is being digitized, it soon becomes clear that literally every single aspect is affected. One key area of interest, and one that takes a central role, is without doubt the Internet of Things within the home.

Anyone looking to play a part in our digitized world needs to make a start right away. Even though a lot happened in 2016, not excluding the property sector, this industry is still at the very early stages of digitization. But how do we go about taking on this challenge? With a strong focus on users and in a prototypical fashion, but, most importantly, quickly, indeed very quickly. After all, a large number of start-ups or “PropTech” companies have already positioned themselves to fill the gap between customers and companies in the traditional sense. However, when it comes to digitizing and calling into question all of a company’s business models and processes, we are really talking about delving deep into that company’s whole way of working and its culture. Decisions of this magnitude can only be made by one person–the CEO.

 

Which one adjective would you use to describe the year ahead for the property sector?

Multi-networked.

 

Photo: etventure

Rupprecht Rittweger

CEO of e-shelter

 

"It is becoming more and more important to have a global footprint"

 

With reference to the content covered under your key topic “Alternative investments" at the EXPO REAL FORUM 2016, we ask: What will be the key trend for 2017?

The global market for data centers saw huge growth in 2016. Digitalization, Big Data, cloud computing, and increasingly stringent regulatory requirements for banks and companies will also lead to a sharp rise in demand in 2017.

It is becoming more and more important to have a global footprint to be able to network data centers in the core markets in America (New York, Dallas, Chicago, Silicon Valley) with those in Asia (Hong Kong, Singapore, Shanghai, Beijing, Tokyo) and Europe (Frankfurt, London, Amsterdam, Paris).

Data centers are a crucial part of global IT infrastructure, with uninterrupted availability and the quality of services (IT and telecommunications infrastructure and energy supply) as the key to success.

 

Which one adjective would you use to describe the year ahead for the property sector?

Exciting.

 

Photo: e-shelter

Florian Stadlbauer

Florian Stadlbauer

Head of Digitalization at Commerz Real AG

 

"A digital tsunami is raging around us"

 

With reference to the content covered under your key topic “Digitalization: Changing processes and new user landscapes" at the EXPO REAL FORUM 2016, we ask: What will be the key trend for 2017?

 Every single property company will need to keep up with the trend toward digitalization–otherwise sooner or later they will find the digital tsunami crashing down around them and washing them out of the market. It is now down to each CEO to decide whether they are going to wait and see what everyone else does or ride the digital wave and harness its power.

It is important that digitalization is not just seen as an end in itself–it needs to be viewed from the customer's perspective. What can we do to wow our customers and which digital services can the company offer now 24/7? How will the needs of our customers change going forward? Which channels will our customers use in future? The focus needs to be on answering these questions and sufficient resources must be made available if the digital shift is to be made successfully. It is no longer enough to have one or two IT positions. What is really needed is a fundamental change in culture.

 

Which one adjective would you use to describe the year ahead for the property sector?

Future-shaping.

Brad Olsen
Dennis Lopez
Jan Linsin
Logan Smith
Markus Trojansky
Ray Mahlaka
Andreas Mattner
Prof Dr Peter Russo
Philipp Depiereux
Florian Stadlbauer

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