Competence is our strength:
Expertise based on experience

Even in the midst of the COVID-19 pandemic, the real estate market has proven to be an anchor of stability. Competition for high-quality business in the preferred asset classes has even increased somewhat.

It is not possible to predict what impact the two lockdowns implemented to date will have on the real estate market, especially given the fact that the real estate market always reacts to overall economic developments with some delay.

The launch of a vaccination campaign does offer hope here, but it is not yet possible to predict how long the vaccination process will take. The achievement of herd immunity is one of the preconditions for ensuring that the economic upswing analysts expect to occur in the spring of 2021 will not be stifled by a new wave of infections. The extensive economic assistance packages implemented by the government are also helping to keep the economy moving. We can expect that most companies will be able to gradually return to business volume at pre-crisis levels once the economy as a whole begins gathering momentum again.

The COVID-19 lockdowns have accelerated what was already a major trend: working from home or on the move. Indeed, everything has been speeded up to such an extent that we are now observing and experiencing changes and their effects as they occur, with no delays in between. Mobile work amounts to a type of high-speed transformation for most employees and companies. Although working from home or on the move has long since become a normal option at many companies, it has remained just that – an option rather than a standard work arrangement. However, because of the pandemic, mobile work has suddenly become the order of the day wherever possible in virtually all economic sectors. This transformation seems to have worked well, as many companies now plan to make greater use of so-called hybrid solutions over the long term.
This also largely corresponds to the wishes of employees who we queried recently via Civey: More than half of those surveyed said they would like to work from home all the time or at least several days a week. However, 16.3 percent of the respondents said they would prefer not to work from home at all. Employers take a different view of things: A total of 63 per cent of employers who took part in a Berlin Hyp Trendbarometer survey said that only one or two days of mobile work is a realistic option at their company. Still, both employees and employers agree that working in an office offers certain advantages, the most important of which in their view is the opportunity to interact and exchange information and ideas with co-workers. We as communicative beings need interaction with others in order to be creative and innovative, both of which are fundamental prerequisites for successful work. Good ideas often stem from direct interaction with others, whether this be in the kitchen, at the coffee machine or while chatting in the corridor.

It will take some time to determine the overall effects that working from home will have if this work arrangement actually becomes the “new normal”. We still don’t know much about the impact working from home can have over a long period of time. In this sense, what we are observing now in this regard might only be a temporary state of affairs. More details on the results of the Trendbarometer survey can be found here.

When it comes to choosing between living in a city or in the suburbs or countryside, most Germans have chosen the city up until now. After all, urban life means experiencing art and culture and socialising and communicating with others, and all of this, combined with pleasant working conditions, has attracted many people to cities over the last few decades.

This trend seems to be on the wane, however, as many people living in cities are apparently now interested in relocating to more rural areas. Expensive inner-city neighbourhoods have become less popular, while suburbs are becoming more attractive. In a survey conducted on our behalf by the Civey opinion research institute, more than half of respondents said they would like to move to the countryside, or at least to the suburbs. This trend was confirmed by the 67 per cent of the participants in our Trendbarometer survey who said they believe that mobile work will accelerate the exodus from cities to suburbs and the countryside. Indeed, people who work from home need more space – and space has become much more expensive in cities over the last few years. Moreover, even someone who needs to go to the office in town on occasion won’t mind travelling a long distance if it means keeping their rent as low as possible and being able to make their dream of a quiet life in the suburbs or the countryside come true. The residential radius around cities is thus expanding – and with it the catchment areas of cities. This can only continue to occur, however, if sufficient infrastructure is either available or developed, whereby high-speed Internet is a must. In other words, work – and attractive housing – is where the high-speed Wi-Fi is.

Unlike other asset classes, logistics properties are benefiting from the pandemic. The systemic importance of logistics has been clearly demonstrated throughout the crisis and demand for logistics and warehouse space has risen in line with the increase in the share of retail sales accounted for by online outlets.
With a transaction volume of approximately 6.9 million square metres, the German market for logistics and warehouse properties recorded its second-highest result in 2020, coming within just four per cent of the record result of 7.2 million square metres achieved in 2018. The second half of the year (transaction volume of 3.9 million square metres) played a major role here. Indeed, this transaction volume was the highest ever for any half-year period. Not surprisingly, this positive development was driven in large part by online retail companies, which accounted for more than one million square metres of warehouse space transaction volume in Germany – more than ever before.

More details on logistics properties can be found here.

In this sense, the pandemic has only accelerated a trend that was already under way. This doesn’t mean that brick-and-mortar retail is dead, however. Good malls that offer a leisure-type experience will continue to exist in future. It’s important that such malls and shopping centres have strong and resilient primary tenants and attractive supplemental offerings, such as food courts and recreational facilities, for example. In addition, people will still want to enjoy the classic shopping experience that includes viewing, touching and trying on products and then taking them home immediately. The brick-and-mortar fashion retail segment is going to suffer in the current situation, however, and we’re likely to see quite a large number of bankruptcies because it’s not easy for fashion retailers to simply shift their revenue generation to the Internet.
In general, one can say that those who operate shops in the fashion segment would do well to quickly implement a concept for converting their stores to another type of use. To name just one example, retail shops can be converted into logistics space that is urgently needed at the moment.