EXPO REAL: Outlook at the Year 2018 EXPO REAL: Outlook at the Year 2018

Outlook at the Year Ahead: What will happen in the property industry in 2018?

Heike Gündling

COO, Architrave GmbH

 

„Digitalization [...] is neither a passing fad nor a specter.“

 

What is moving you and what are you moving in 2018?

The 2018 property year will be marked by an unabated upward trend - mainly in the transaction environment, which, of course, also considerably influences us as data managers of the industry. Digitalization and the application of artificial intelligence is neither a passing fad nor a specter. Numerous products of the digital economy which were successfully introduced in the last few years and have meanwhile become established could generally allay the concerns and reservations in the property industry, although many players are still struggling with the actual implementation. There already are mature digital solutions for data management in particular, which is of central significance. One of the essential tasks for 2018 must, therefore, be to actively support property companies with the development and - most of all - with the implementation of their digitalization strategy. Compared to numerous other industries the property industry still has considerable development potential, both on a national and on an international scale.

 

Prof. Lorenz Reibling

Chairman and Senior Partner, Taurus Investment Holdings, LLC

 

„Less money will flow from the USA into European real estate.“

 

What is moving you and what are you moving in 2018?

The U.S. “tax-reform” whipped through both houses of Congress is truly “very massive”. As I predicted at Expo 2016, these tax cuts will result in a firework on the stock market, by now confirmed, but will have a rather dampening mid-term impact on the real estate market in the U.S. Exception to this prophecy will be the rental apartment sector. Less money will flow from the USA into European real estate. Price increases will level off or vanquish.
Real estate in some parts of the world though will flourish. Unfortunately most emerging markets are very hard to access and/or blatantly corrupt. Given the dramatic changes in the pursuit of transparency and simplification of both the tax- and banking systems, India might be the best bet. The main benefit though is the large number of secondary markets, un(der)developed in virtually all asset classes. Except for China, no other country has that many cities with 1 to 2.5 million inhabitants. India is now the fifth largest economy in the world with a growth rate of 5-7% annually.

 

Dr. A. Stefan Kirsten

CFO, Vonovia SE

 

„For residential properties in cities the gap between supply and demand will continue to grow.“

 

What is moving you and what are you moving in 2018?

For residential properties in the cities the gap between supply and demand will continue to grow. The executive branch and in particular Federal politics are acting too slowly. This heats up the market even more. Comprehensive, quick and common solutions are needed.

We want to boost new buildings, in order to provide at least 2,000 new homes per year. We have a comprehensive investment program and this requires adequate financing.

 

Alexander Otto

CEO, ECE Projektmanagement GmbH

 

„Growth in online retail remains a challenge for all stationary retailers.“

 

What is moving you and what are you moving in 2018?

Growth in online retail remains a challenge for all stationary retailers. I hope that consumers will remain loyal to the classical retailers and the shopping centers - because they offer a unique atmosphere, service and advice, exciting food concepts and many events and campaigns. Apart from that it will be exciting to see how the property market and interest rates will develop. It would be nice to see a few centers or center portfolios entering the market again, which are interesting for the ECE funds.

We are starting refurbishment in numerous centers - we have just started our “at your service” program, in which we will invest € 160 million in new services and modernization over the next few years. About 60 centers will benefit from the first step - with new lounge zones, more attractive parking garages and new digital services. The logistics and hotel segments are booming in the development business: For Hermes we are starting the implementation of the next projects of a series of nine logistics centers, and in Hamburg we are developing a big congress hotel in HafenCity.

 

Prof. Dr. Michael Voigtländer

Head of the Research Unit Financial and Real Estate Markets, German Economic Institute

 

„Important directions for the years to come could be determined in 2018.“

 

What is moving you and what are you moving in 2018?

2018 will be an exciting year for the property industry. The very good general conditions with a robust economy, high immigration and low interest rates will gradually deteriorate, which will slow down the price dynamics. I do not expect a crash, however. But the political circumstances are even more important: What will be the focus of the new government? More subsidies, such as higher depreciation and a new home ownership incentive, or more regulation? Important directions for the years to come could be determined in 2018.

Of course, I will keep an eye on the housing policy and continue to get involved and make my own proposals wherever appropriate. On top of this my team and I will also increasingly focus on commercial properties. What does immigration mean for retailers? Is speculative exaggeration imminent for office properties? There is still a need for much research.

 

Dr. Lutz Aengevelt

Co-managing partner, AENGEVELT IMMOBILIEN GmbH & Co. KG

 

„The property market presents itself with textbook behavior.“

 

What is moving you and what are you moving in 2018?

The property market presents itself with textbook behavior: The number of properties for sale is increasing. The reason: Most market players specializing on land deals believe that the peak of the price development has been passed. We see that in the rising number of offers.

At this point it is worth mentioning that a growing portion of what is offered is technically demanding and requires critical scrutiny. In the majority of cases our specialists deal with the material valuation before the transaction is made together with selected partners and savvy experts like TÜV Rheinland.

The financing banks see the market development just like this as well and take a critical look at the substance, sustainability of the tenancy agreements, increasingly require rising repayments because of the continuously low interest rates and thereby reduce their risk exposure.

Susanne Bonfig

Head of Real Estate, Office & Industrial, Commerz Real AG

 

„Space is no longer just space.“

 

What is moving you and what are you moving in 2018?

Digitalization changes the business models of our customers profoundly and sustainably influences our letting activities.
Space is no longer just space, many different considerations precede rental agreements. The office reflects the corporate strategy, makes corporate culture come alive. It is where customers, employees and business partners meet. The office should make a positive contribution to the object of the company. At the same time the functional perspective must not be neglected, costs are an important factor. There is also the question how contracts can be drafted to be so flexible that they can “breathe” according to the demand.
We intensively look at how we can help our customers meet their demands. We try to see how we can adapt our properties to changed requirements - and which properties we want to manage in the future.

For 2018 we have set out to make more time for our tenants.

 

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