Lecture on Real Estate Markets and Investors at the Technical University of Munich 🏢📈
This year, Gunnar Gombert is once again guiding students at TU Munich through the winter semester in his course on real estate markets and investors. Recently, master’s students had the opportunity to attend two guest lectures, which offered in-depth insights into the challenges and trends in the real estate sector. Dr. Christina Hilger (Partner, TME Associates) and Helge Zahrnt (Head of Research, Cushman & Wakefield) shared their expertise on market developments and strategic approaches. Here are the key takeaways:
Dr. Christina Hilger focused on "Real Estate Portfolios in Challenging Times," demonstrating how companies can respond to the dynamic market requirements through an agile portfolio strategy. A comprehensive approach to understanding the interplay between users, owners, and property locations is becoming increasingly essential. Transformation and agility are now critical factors in meeting the demands for customer centricity, sustainability, and digitalization. Key points included:
Cost Pressure and International Competition: Companies face growing pressure to streamline structures and operate more efficiently.
Flexibility in Property Holdings: While only 25% of corporate real estate in the U.S. is company-owned, 75% in Germany is. These differences have a significant impact on flexibility in real estate management.
New Work and Property Ownership: Returning to the office presents unique challenges for owner-occupied buildings due to limited flexibility.
Location Consolidation and Production Shifts: Some German companies are consolidating around 50% of their domestic sites and moving production to countries like India or Indonesia, where sustainable renovations or modifications are often more cost-effective.
Shared R&D Facilities: More companies are opting to share their costly research facilities – a new trend that brings up questions related to security and intellectual property.
Helge Zahrnt shared valuable insights from a research perspective on current developments in the European and German real estate markets. He highlighted how market analyses provide essential decision-making foundations and reduce uncertainty – an invaluable role in a market that remains relatively opaque. His research teams employ a blend of digital methods alongside desk and field research. Key market trends include:
Inflation and Interest Rates: Both are slowly declining, but inflation protection via real estate is primarily limited to logistics assets.
Office Markets: While prime rents are rising in top locations, vacancy rates in major cities are increasing (currently 8% in the Top-5 cities). New construction projects are declining as pre-financing becomes more challenging.
Investment Strategies: Logistics, industrial, hotel, and residential sectors now account for 50% of transaction volumes – a major shift, as offices and retail previously dominated. The transaction volume is expected to reach €25 billion in 2024, with a recovery to €35 billion projected by 2025.
Residential Market: Rents are rising steadily in line with demographic trends.
Market Cycle: While prime segments are showing signs of a price floor, the outlook remains downward for secondary locations and lower-quality properties.
The lectures from Dr. Christina Hilger and Helge Zahrnt provided the students with valuable insights that go beyond traditional academic knowledge, offering a realistic view of current developments in the real estate industry. We extend our gratitude to both guest speakers – these insights greatly enrich the education of future leaders in the real estate sector.
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