Perspectives of Munich's Real Asset Investors
Last week at the PwC and Strategy& Roundtable, and this week for the Expo Real review at PwC: Munich's Real Asset investors met again to discuss the current challenges and opportunities in the real estate sector. Gunnar Gombert from Gunnar Gombert Strategy Consulting had the honor of opening the session with a brief presentation on the latest market developments. The focus of the event was on changing demand from both user and capital market perspectives, as well as strategic considerations for the industry's future.

Changing Demand on the User Side
The real estate industry is undergoing significant changes driven by several megatrends:
Digitalization and Office SpaceDigitalization has significantly reduced demand for office space, while sectors like logistics and data centers continue to benefit. Companies are increasingly shifting towards more flexible work models, further altering space requirements.
Pressure on the Housing MarketUrbanization is driving up rental prices in metropolitan areas, while new construction remains stagnant in many regions. The imbalance between supply and demand is intensifying challenges in high-demand residential markets.
Sustainability as a Key CriterionSustainability has become a crucial market factor. Markets are increasingly divided into "green" and "brown," with non-sustainable properties losing both attractiveness and value.
Weak German EconomyThe current economic weakness in Germany is reflected in a stagnating rental market. As a result, investors are increasingly focusing on high-growth regions such as Asia and Latin America.
Changing Demand on the Capital Market Side
The capital market is also undergoing shifts, driven by regulatory frameworks and central bank policies:
Regulatory Influences and Central BanksRegulatory bodies and central banks are having a significant impact on the business strategies of many market players. Banks are currently in "wait & see" mode, awaiting clearer market developments.
Valuation Adjustments Driven by BaFinDue to regulatory pressures, particularly from BaFin, further valuation adjustments for real estate assets are expected. Market participants appear to be divided into two cycles: Some are struggling with refinancing and distribution challenges, while others are once again looking for attractive investment opportunities.
Where is the Market Heading?
The future of the real asset sector will be shaped by structural changes in demand and evolving capital sources:
Product Strategy AdjustmentsDebt funds, infrastructure projects, private equity, as well as logistics and bed investments are gaining importance. Increasingly, investments are being made in high-growth regions such as Asia and Latin America.
Overallocation in the Office SegmentMany investors continue to hold a significant portion of office properties in their portfolios. Prices are still too high to spur a dynamic transaction market, meaning asset managers will need to manage their existing assets for longer periods.
Consolidation of Asset ManagersMarket consolidation is on the horizon: Large players will continue to grow, while specialized, smaller firms will occupy niche markets. However, mid-sized providers without a clear USP may struggle to survive in the evolving market.

Conclusion: Strategies for the Future
The industry will need to adapt to ongoing cost pressures and necessary adjustments. As long as traditional business models dominate, effective cost management will remain a priority. However, in the long term, market consolidation and a shift towards sustainable, high-growth sectors will define the strategic direction. The PwC Roundtable once again provided valuable insights for market participants, especially following the in-depth discussions at Expo Real.