The turbulent price developments in the real estate industry have been hard to miss in recent years. In addition to the already large price jumps, the overall economic conditions, at least since Corona, the rise in interest rates and increasing regulations from the federal government have further unsettled the market. The consulting company Ernst & Young Real Estate has now presented a trend barometer.
Real estate market: Professional investors expect a low in 2024
Professional investors spent around 114 billion euros on real estate in 2021, compared to only 67 billion euros invested in 2022. However, many investors believe that the bottom of the real estate market is still to come, explains Christoph Haub from the consulting firm Ernst & Young, as the Tagesschau reports. This recently presented a trend barometer on developments in the real estate market.
The investors mentioned above include real estate funds, pension funds, insurance companies and pension funds. According to the Tagesschau report, citing the EY trend barometer, only the latter are currently interested in investing in the real estate market. Because of the long-term nature of the investment, these are not so dependent on the absolute low as an entry point, according to the trend barometer. Real estate funds and the super-rich are completely different; they are currently distancing themselves from real estate investments.
At the center: focus on renewable energies and social aspects
The report shows that currently interesting investments in this sector include wind farms and other properties in the renewable energy sector. Office space, however, is less interesting. Haub explains that the social aspect now plays a particularly important role.
The priority is to look for properties in good residential areas, those with mixed population groups, good transport connections, kindergartens, schools and ongoing businesses. Due to the long-term nature of the investments that insurance companies, pension funds and pension funds need in order to be able to make their payments later, these very aspects are important in order to guarantee the duration of the investments.
Sustainable energy efficiency: Dominant topic and driving force in the real estate sector
The dominant theme on the markets, including of course in the real estate sector, is sustainability. In terms of real estate specifically, energy efficiency. The consultant explains that most companies in the industry assume that only those properties that are sustainable will last. Almost all of the 32 companies surveyed for the trend barometer stated that they had analyzed their properties and would renovate them to make them more energy efficient.
The report explains that it is more economical to renovate poorly insulated buildings yourself than to sell them. Because if the properties that were poorly renovated or not renovated at all went on the market, you would have to accept large discounts.
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