Real Asset Insight #6 June 2020

Insight & Strategy – Germany
Residential and logistics sectors to
show their resilience post-crisis
Hotel, retail and office sectors to bear the brunt of impact
‘It is a great
time for equityrich
players
to dominate
activity in core
locations.’
Marcus Lemli,
Savills Germany
Residential and Logistics will prove to be the
most resilient sectors as Germany deals
with the coronavirus crisis, experts have told
Real Asset Insight.
‘Our research shows that the most negative
impact of Covid-19 will be seen in the hotel
sector and also in retail and some parts of the
office market,’ says Matti Schenk, associate
research, at Savills. ‘The good news is that some
parts of the real estate market, notably logistics,
residential and healthcare, will be resilient.’
Investor and tenant demand for logistics is
strong and the sector has benefited from the
increase in e-commerce during the lockdown.
And residential ‘is the most resilient asset class’,
says Tobias Schultheiß, managing partner at
Blackbird Real Estate.
‘The operational part of the business is doing
very well, but the investment side is a different
story, we have slowed down transactional
activity,’ reports Rainer Nonnengässer, CEO of
International Campus.
It is a only a temporary setback, he adds: ‘Shortstay
and hospitality products will see a decline
as people limit business travel, but micro-living
products will continue to be in demand. As for
student housing, the inflows of foreign students
will resume and there will be shortages of supply.
I’m sure we’ll see strong inflows in the sector in
the next few months.’
Flexibility will be the key word in the office
sector post-crisis, says Marcus Lemli, chief
executive officer of Savills Germany and head of
investment Europe at Savills: ‘We are learning a
lot from the biggest home working experiment
that is going on at the moment. There will
be a need for social distancing in offices and
we already see tenants either reducing or
reconfiguring space to make it more flexible.’
MOBILE WORKFORCE
Mobility will be another key trend, as in future
most people are likely to alternate between
working from home and holding meetings
in the office.
‘The office market will change after the crisis,’
says Schultheiß. ‘Home working will increase, but
I don’t see a massive reduction in office space.
People will still want to meet face to face.’
As banks are cautious and foreign investors
have limited access to the market, Germany is
now a playground for domestic investors who
don’t need to worry about financing and who
can focus on the best assets in the most
resilient sectors.
‘It is a great time for equity-rich players to
dominate activity in core locations,’ says Lemli.
‘There are a lot of domestic players, pension
funds, big institutions, insurance companies that
are very active. We’ve even seen prices increase
due to competition.’
Working from home in Germany
is likely to become a key trend
after the Covid-19 crisis
Adobe Stock/Girts
40 Real Asset Insight | Issue 2 July 2020