Germany Real Estate Market Outlook 2022 - Update H2
05 Juli 2022
- Economy: The German economy is under the spell of exogenous shocks such as the Ukraine war, high inflation and supply bottlenecks. Due to these factors, economic activity is significantly weaker than expected at the beginning of the year.
- Investment Market: Rising financing costs are currently weighing on market sentiment and leading to repricing across almost all asset classes. Lease indexation and strong rental growth are mitigating factors.
- Office: The office leasing markets are proving robust for now. Flexible and hybrid workplace strategies in particular are making inroads and are responsible for a sustained lack of supply in the premium segment.
- Retail: Another exogenous shock has terminated the steady return to normality and added upward pressure on retail – although the impact varies.
- Logistics: Together with e-commerce expansion, supply chain restructuring should ensure sustained excess demand and sound rental growth.
- Residential: Higher borrowing costs and the increase in capital market interest rates are triggering a move by investors to reshuffle their portfolios. Differentiation in residential investment is increasing rapidly, both in terms of space and quality.
- Hotel: Market recovery, above all in the vacation regions, and with city tourism, is swifter than predicted at the start of the year – a development dampened by current exogenous price shocks.
- Senior Living and Healthcare: Sharpening of investor interest through attractive fundamentals is ensuring excess demand. Assisted living and serviced living for senior citizens are cementing a position as another asset class.