GRIGerman Real Estate in 2019 – What to look out for
Could Frankfurt become Europe’s financial capital post-Brexit? Inside Germany, just how important is location?
December 13, 2018Real Estate
GRI Club Deutsche members gathered in London on 4 December 2018 to share their thoughts on Germany’s macro outlook and which international investors are moving into the German market. Members focused on market reaction in Germany to matters including: the continuous increase in construction costs; rental prices and interest rates; uncertainties over Brexit; and where to find value in different asset classes and investment types.
The discussion touched upon Germany’s late-stage investment cycle and if an end may be in sight, which led to a debate on A-class locations versus B and C-class cities. Frankfurt and its office scene, in particular, were mentioned, raising the question of whether it could take over as the financial capital post-Brexit, or if it would miss out to the likes of Paris, Dublin and Amsterdam.
Participants considered which global investors to look out for in 2019, mentioning concerns over Brexit uncertainties and the US-China trade war. However, overall, the outlook was optimistic, with a tendency towards selling rather then buying. In the case of investment types, core and core+ were identified as easier targets in the German markets, whilst value-add and opportunistic investment opportunities seem to be lacking. On the other hand, retail was suggested as a possible focus for opportunistic investors going against the grain of investing in offices.
The overall sentiment of participants was optimistic going into 2019, albeit with some clouds looming, and some suggested that they were struggling to find sensible investment opportunities. However, they were in agreement that Germany could still be seen as a safe haven for real estate investment, although to keep an eye out during any downturn, and to remember that in Germany, location triumphs over asset class.
The discussion touched upon Germany’s late-stage investment cycle and if an end may be in sight, which led to a debate on A-class locations versus B and C-class cities. Frankfurt and its office scene, in particular, were mentioned, raising the question of whether it could take over as the financial capital post-Brexit, or if it would miss out to the likes of Paris, Dublin and Amsterdam.
Participants considered which global investors to look out for in 2019, mentioning concerns over Brexit uncertainties and the US-China trade war. However, overall, the outlook was optimistic, with a tendency towards selling rather then buying. In the case of investment types, core and core+ were identified as easier targets in the German markets, whilst value-add and opportunistic investment opportunities seem to be lacking. On the other hand, retail was suggested as a possible focus for opportunistic investors going against the grain of investing in offices.
The overall sentiment of participants was optimistic going into 2019, albeit with some clouds looming, and some suggested that they were struggling to find sensible investment opportunities. However, they were in agreement that Germany could still be seen as a safe haven for real estate investment, although to keep an eye out during any downturn, and to remember that in Germany, location triumphs over asset class.