Munich, 1 July 2020 – The impact of the Covid-19 pandemic on Europe’s commercial real estate markets is partly severe: rising costs of financing and uncertainty regarding many asset classes, the resurgence of tenant markets in B and C locations, and the recalibration of formally customary valuation metrics for properties. Among other findings, these were the conclusions drawn by a panel of experts from Real I.S., Commerz Real and LBImmoWert for their discussion today with journalists from all over Europe on the topic of “Investment Management in Times of Covid-19”.
The economic fundamentals which boosted demand for real estate investments over the past decade are holding steady: “The combination of low interest rates and too little product in the market is the determining factor. The market in Class A locations remains a landlords’ market. In B and C locations, however, the market may turn out to be a tenants’ market in the short to medium term,” explains Jochen Schenk, Chief Executive Officer of Real I.S. AG.
Despite ongoing great pressure to invest, investors should currently act with foresightedness: “From our viewpoint, it’s more the risks which outweigh the opportunities with most investments in the current situation,” says Henning Koch, Board member of Commerz Real’s Board of Management.
At the same time, lockdowns and closed borders are particularly challenging when valuing property – especially as a detailed on-site inspection remains “state of the art” for any full appraisal also during the crisis: “While current valuation methods are not up for scrutiny, the customary valuation parameters are meticulously analysed for any changes in the trends. The sheer number of developments are currently difficult to gauge,” explains Monika Preithner, Managing Director of LBImmoWert.
A realistic valuation of property is nevertheless still possible at present: “Providing up-to-date technical and legal documentation which is as comprehensive as possible on developed and undeveloped property is advisable to reduce uncertainty. Combined with video transmission, this is currently one way forward,” Preithner affirms while at the same time expressing a clear ‘no’ to general risk discounts in the market.
The investment managers who operate on an international scale consider themselves well equipped for any opportunities which may arise: “While the price level has remained virtually unchanged, the uncertainty about many asset classes is more acute and the financing costs have increased. For this reason, our approach is more that of an observer waiting for attractive acquisition opportunities. We are optimally prepared and can respond swiftly to any appropriate opportunities as our ‘war chest’ is well filled,” Koch explains.
“Trends which existed prior to the crisis, such as home office, the repurposing of shopping centres as venues for the shopping experience, e-commerce and urban logistics, are ongoing and are partly being reinforced by the crisis. It’s about responding to these trends and exploiting opportunities as they arise,” Schenk affirms.
He sees major international investment managers at an advantage: “With borders closed during times of a pandemic, international branch offices are very important. We have five branch offices located abroad with acquisition and asset management experts. We are therefore particularly well positioned in the competitive arena,” Schenk states with conviction.
About Commerz Real
Commerz Real, a member company of the Commerzbank Group, stands for more than 45 years of experience in the market and has assets under management of around EUR 35 billion. It links up in-depth and know-how in asset management and broad-based structuring expertise with its signature range of services consisting of value-oriented fund products and customised financing solutions. Its range of funds includes the hausInvest open-ended real estate fund, institutional investment products, as well as the CFB Invest brand's entrepreneurial investments in real assets focused on the segments of aircraft, renewable energies and real estate. As the leasing service provider arm of the Commerzbank Group, Commerz Real additionally offers customised equipment leasing concepts and individual financing structures for assets such as real estate, large tangible assets and infrastructure projects. www.commerzreal.com
About the Real I.S. Group
Real I.S. BayernLB’s fund provider specialised in real estate investment for more than 25 years. As a member company of the Sparkassen-Finanzgruppe (group of German savings banks, Landesbanken and associated companies), the Group ranks among the leading asset managers in the German market. Along with alternative Investment Funds (special AIFs and closed-end mutual AIFs) and an open-ended real estate fund for private individuals, the range of products and services comprises customised fund solutions, club deals and joint ventures. The company has assets of around EUR 9.2 billion under management. The Real I.S. Group has two licensed investment management companies (KVGs) established under the German Investment Code (KAGB) and operates subsidiaries and branches in France, Luxembourg, Spain, the Netherlands and Australia. More information is available on the company's website at www.realisag.de/en/home/index.html.
Founded in 2002, LBImmobilienbewertungsgesellschaft (LBImmoWert) is the Centre of Competence for real estate valuations and research in Germany and Europe. Our 50 certified, independent and experienced real estate appraisers carry out more than 3,000 valuations a year with a market volume of EUR 50 billion. Our services portfolio encompasses all valuation scenarios and ranges from preliminary analysis right through to market and property ratings. www.lb-immowert.de
Gerd Johannsen, +49 (0)611 7105-4279
Real I.S. AG:
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Fax: +49 (0)89 489082 - 295
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Barbara Falke, Press and Marketing
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Carmen Schlichting, Leitung Research
+49 (0)89 12 22 17 – 134