The EXPO Real fair in Munich is a significant event in the European real estate investment market, which every year attracts entrepreneurs, investors, and public sector representatives. Similarly, as in previous years, key trends, opportunities, and challenges facing the commercial real estate sector were discussed over the course of the three-day event. Renata Osiecka, Managing Partner, AXI IMMO, summarizes the EXPO Real fair which took place from October 4-6.
Renata Osiecka, Managing Partner, AXI IMMO, summarizes: “The current condition of the commercial real estate market is the result of rising interest rates, high financing costs, energy costs, uncertain political situation, and the inflation associated with it. Despite the difficult macroeconomic situation, the attendance at the fair was very high. It was apparent that all real estate market participants are looking for opportunities to carry out joint investment projects.”
During many discussions, issues related to ESG, decarbonization, digitization, demography, and the associated future of urban development were discussed. In addition, matters related to searching for investment opportunities, the analysis of local PRS markets, the challenges in preparing property valuations were brought up. Nonetheless, aspects related to the investment sector, sources of capital, and housing construction remained crucial. On the demand side, tenant strategies’ diversification regarding expansion and adopting a ‘wait-and-see’ position were noted.
Many experts pointed to an increasing number of unconventional investments in the real estate sector. The discussion was more focused on looking for opportunities and building joint investment initiatives than straightforward sales transactions. One of the most frequently suggested methods might be joint venture companies, in which the capital will not come from a single source.
The real estate sector, despite temporary difficulties, is a prospective market with a chance to return to a growth path by the second half of 2024. At the same time, market participants emphasize the need for a flexible approach to changing market conditions and adjusting the investment strategy to new circumstances.
More and more investors and developers are recognizing the importance of ESG not only from a moral perspective but also as a factor influencing the return on investment. Companies that implement initiatives related to environmental protection, social responsibility, and good governance, gain a competitive advantage in the market. At the same time, ESG is becoming an increasingly important criterion for investors who expect their portfolios to be managed considering these values. ESG-compliant investments can bring both financial and social benefits.
Particularly important for the future of investment activities are the decisions of the European Central Bank regarding the level of interest rates for the upcoming years. Their stabilization seems to be key for the further development of the sector. Among investors and developers, there is no consensus on whether the recovery in the sector will arrive in 2024 or perhaps only in 2025.”
