Yet despite promising signs of macroeconomic improvements in Europe in recent weeks, the situation in Germany looks no closer to thawing out.  

Thomas Gitzel, chief economist at VP Bank, recently warned as much. ‘With the winter months approaching, the German economy also seems to be going into hibernation,’ he said in a briefing note. ‘Over the next few quarters, the German economy will be caught in a triangle between stagnation, slight growth and a slight contraction in gross domestic product.’

High energy prices in Europe and views over the bloc’s declining competitiveness compared to other regions have contributed to the negative outlook. Yet despite this – or perhaps because of the dislocations presented by Germany’s current weakness – European real estate investors are finding reasons to snap up assets in the country.

Just last week, PGIM Real Estate provided a senior loan of over €300 mln to a leading European logistics platform to finance a portfolio across Germany on behalf of its European Core Debt investment strategy. The sizeable portfolio of more than 510,000 m2, with construction dates ranging from 2004 to 2022, is a bet on the country’s future.

Meanwhile, AEW recently acquired a newly-built logistics asset over the border in Austria on behalf of a separate account mandate for a German investors. Money is moving, even though question marks remain about valuations, economics and the business outlook.  

International view
Plenty of investors are also heading to Expo with an eye on pan-European opportunities. Randy Giraldo, head of Europe at Nuveen Real Estate, says that ‘it is clear we are in an easing period, but we will mostly be on the lookout for signals that indicate the pace of slackening demand.’ He adds: ‘For Germany in particular, Expo is a great opportunity to gauge market fundamentals and sentiment in one of our primary regions.’

In terms of the business Giraldo expects to conduct at the event, he adds: ‘We have a number of transactions we are looking to close, so first and foremost we will be looking to make meaningful progress on those. We will also be on the lookout for new investment opportunities for our key strategies of Value Add on the equity side and our pan-European debt offering.’

For Karolis Adlis, executive director at WP Carey, ‘monetary policy decisions on both sides of the Atlantic and the wider implications this will bring for real estate markets will be a key point of discussion at this year’s conference in Munich’.

He explains: ‘While many will be focused on the path forward for central banks in terms of base rates, we believe a factor that is just as important to consider is long-term borrowing costs; real estate investors are long-term players which means that the ECB’s short-term deposit rate cuts will likely not have as great an impact on markets as some have suggested. Most recent cuts in central banks’ base rates have also already been priced in by the market for some time.’

Geopolitics and deals
Adlis also thinks that the upcoming US elections will be on everyone’s agenda, ‘especially among delegates from CEE, as geopolitical uncertainty remains centre stage’. He adds: ‘At WP Carey, we are sector-agnostic and are fundamentally focused on ‘mission critical’ assets that are essential to a company’s operations. However, at this moment we are seeing attractive opportunities across logistics and food retail sectors in Europe.

‘Furthermore, the current market presents significant refinancing hurdles for corporates and sale-leaseback solutions are a perfect tool to gain liquidity from otherwise illiquid assets. With these factors in mind, we remain optimistic about our ability to identify and close attractive deals for the remainder of 2024 and into 2025.’

Ulrich Von Creytz, CIO Real Estate Europe, DWS, is in optimistic mood. ‘Expo Real is a highlight of the year for us,’ he says. ‘It provides the ideal environment for exchanging ideas with long-standing business partners and new contacts. We have a unique opportunity to discuss market trends as well as very specific investments. Unlike many other industry meetings, Expo Real is also an environment where transactions are actively advanced.’

In terms of discussion topics, Von Creytz says that ‘on the acquisition side, we are particularly interested in logistics and residential, especially operational living’. He notes: ‘I am particularly looking forward to the exchange of ideas on new technologies. We have a number of appointments with proptechs on the agenda.’

In conclusion, he feels the timing of Expo is excellent: ‘We are at the beginning of a new cycle in the real estate markets. The severe turbulence following the interest rate turnaround is coming to an end, and we are even seeing rising property values in some areas.’