Germany the number one favorite real estate market for cross-border funds
The strong economic recovery supports the recovery in the real estate markets and the downside risk can only arise from higher inflation or a resurgence of the pandemic, CBRE points out in a recent;y published report regarding the German real estate market.
According to the company, Germany is considered the number one favorite real estate market for cross-border funds, and investors who choose defensive investment tactics. As such within 2022 it is estimated that it will record excessive demand for key real estate categories and compressed yields.
In 2022 there will lbe observed an ongoing recovery in the office leasing markets, also thanks to backlog effects, with a focus on contemporary and high quality office space. Meanwhile the short supply in the core segment will be pushing rents up.
A positive boost to physical retail space will come as a result of increased consumer spending backed by demand-side effects and savings that have been accumulated during the pandemic.
During the year, strong demand from warehouse occupiers will continue to boost investor interest in this asset category. The increased offers for land and real estate in this category, combined with the simultaneous lack of supply, are expected to cause an increase in rents and a decrease in yields.
In the housing sector, the balance of portfolios will continue in the direction of (affordable) housing. The lack of affordable housing is seen as an additional impetus for the future financing of such housing projects, including acquisitions of companies and platforms of this type.
According to CBRE, there's an optimistic outlook as from the summer season 2022, above all in the vacation regions and those with city tourism. Funds will be mainly committed to low-risk core and core plus properties determine the investment market.
Finally, despite the intense construction activity and the increase in the capacity of data centers, market saturation is declining, creating new opportunities for investors with operational experience.