Expo Real 2013 Positive outlook for the market

 Expo Real flashback: urbanization and conversion

 
Two topics were dominating conversations at this year's Expo Real: the increasing urbanization and the corresponding need to find enough space for city growth, partly by defining new uses for already existing objects – a process also known as conversion. Money, on the other hand, seems to exist abundantly after the financial crisis. Whereas last year, fears about financing gaps and a potential credit crunch were on the agenda, the challenge now is rather to find the appropriate assets for a lot of yield-hungry capital.
 
Eastern Europe: Much space, little transparency
Urbanization is not at all restricted to Western Europe and due to the inflow of fresh capital after the crisis, also markets in Eastern Europe are again targeted by investors. This is all the more so as prices might still have some upside potential there. Moreover, spacial restrictions are not as common as in the Western European economies, as most of Eastern Europe is much more sparsely populated.
 
However, regional markets in Eastern Europe are sometimes hard to understand for foreigners. Without local expertise, it is difficult to assess, which projects will bear fruit in the long run. “The Russian real estate market is highly regionalized,” says Maksim Kiselnikov, head of the committee for the development of the Leningrad region. Many foreign investors therefore tend to favor the well-known metropolitan areas. Whereas Russia presented all of its important urban agglomerations at Expo Real, the eyes of most visitors were fixed on the capital – Moscow. This was confirmed by Alexey Kozak, Co-Head Real Estate at private equity house VTB: “Most of international investors' money flows to Moscow and institutional investors are cherry-picking.”
 
Western Europe: Much money, little space
In Western Europe, it is hardly a problem for a developer now to raise the necessary money, if the general framework fits. “There is a lot of money that is being invested in Europe at the moment,” says Saul Goldstein, founder and managing partner of fund managing firm Activum SG. “It feels like 2004 all over again,” he added. The crucial point lies more in the fact that development space is getting scarce. Developers therefore have the aim of transforming as much used space as possible and convert it to a new use.
 
Many commercial areas at the outskirts of metropolitan areas or near airports nowadays come from refurbishments of former military areas, especially in Germany. Due to their location, these areas are of special interest for logistics companies. Goodman Germany, the largest developer of logistics property in Europe's biggest economy, is constructing half of its new projects as so-called brownfield developments, the other half are still greenfield projects. And also Goodman has no problems in attracting new money from investors. “We have raised a considerable amount of capital, the interest of investors and the trust in Goodman is very big,” says Jordan Corynen, newly appointed Director Germany of Goodman.
 
In search for new residential space
The conversion topic also comes into play in the city centers. Here, it is the converting of office space into residential areas or the splitting of larger apartments into smaller ones that is driving the game. Due to a lack of investment in residential property in the past few years on the one hand and a rise in single households on the other hand, many cities have a supply gap for smaller apartments now, especially those with only one or two rooms. This is of crucial importance for the very young people – students for example – as well as for the elderly, who often have special needs when it comes to the design of residential space.
 
Accordingly, many developers have found that student housing can be an attractive market niche. One German example is GBI AG, which is active in the market with its SMARTment concept. One of its latest developments is the Alphons Silbermann House in the Zollstock district in Cologne. And also this is a conversion. The existing building with a floor space of about 6,300 square meters was bought for €3.9mln from an insolvency proceeding and is currently being refurbished. In due course, the building will host 170 student apartments. GBI has sold them all off in record time to retail investors, with the help of the realtor arm of the local Cologne savings bank. “We have sold off the Cologne project completely in only three months – which surprised us very positively,” said Bastian Pütz, managing director of GBI Capital GmbH.
 
Opportunities in the South
Due to a necessary market clear-out and the corresponding sale of ailing property there, the markets in Southern Europe, especially Spain, should be of interest in the months to come. Conversion is also a topic here, as not all hotels started during the construction boom will end up in their formerly designated function. Villa Noble, a property agency, for example is active in the conversion of hotel resorts into high-class residential solutions for the elderly – so-called classic resorts. The targeted client group are Northern Europeans who want to spend part of their sunset years in a mild climate. “The mild, healthful climate in Southern Spain is fostering the mobility of elderly people – especially with diseases such as rheumatism, gout or Parkinson's,” says Johannes E. Schumacher, managing director of Villa Noble.
 
Nevertheless, the newly created classic resorts are operated in cooperation with well-known, international hotel brands. “Only about 25% of services needed in residential solutions for elderly people are of a medical nature,” remarks Schumacher, “the question being: Why should non-medical services be supplied by someone who has no focus on it?” As in every conversion process, the right framework conditions are essential in this respect.
 
In a nutshell, urbanization and conversion open up many interesting niches for investors, be it in the East, the Middle or the South of Europe. What we have not seen yet, however, is an overall mega-trend. Thus, finding the right investment opportunities requires a lot of flexibility. “You have to be pretty nimble in these times,“ says Saul Goldstein from Activum SG. 
 
 
EXPO REAL 2012 finishes on a high
 
 
The strong property markets in Central Europe, and in Germany in particular, have prompted a positive mood at EXPO REAL, despite differences in development between individual countries. For the 36,000 participants in EXPO REAL, the 16th International Trade Fair for Property and Investment, the focus on all three days was again firmly on networking and business.
 
Business is certainly what EXPO REAL is all about for Torsten Knapmeyer, Managing Director of Deka Immobilien and WestInvest: "We use the trade fair to exchange news and views with our business partners about the current situation in the industry. The numerous events at the trade fair also afford the opportunity to get an idea of what other market participants think about how the property markets are developing. Traditionally, EXPO REAL has proved to be a good place to discuss transactions."
 
Jan-Willem Bastijn, Head of EMEA Capital Markets at Cushman & Wakefield, UK, comments: "There was a positive atmosphere at EXPO REAL 2013 – we are on the brink of a turning point. The mood is continuing to improve and we are seeing an increased willingness to do business right across the board." Teresa Dreo, Business Unit Manager Real Estate Germany at Unicredit Bank AG, Germany, agrees: "For us as a property financier, EXPO REAL, the International Trade Fair for Property and Investment, is the most important trade fair bar none. With our focus on Central and Eastern Europe, especially Germany, we see EXPO REAL as the ideal networking platform for these markets. The continuing keen interest in German property is clearly reflected in the positive mood at the trade fair and contributes not insignificantly to its overall success." 
 
This year, as well as the classic markets of Central and Western Europe, many countries from Eastern and Southeastern Europe were also represented. Commenting on this, Irina Babyuk, Chairwoman, Committee for Investment of St. Petersburg, Russia, said: "In view of the increasing competition for investors among regions and cities, it is necessary to develop their investment potential. As an attractive business platform, EXPO REAL provided St. Petersburg with the opportunity to demonstrate this potential. During the trade fair we presented the city’s projects which aroused interest among European companies. It is important to note that we have signed two agreements worth 1.7 billion euros." 
 
The presence of the entire value-added chain in the property sector impressed many first-time exhibitors, too. Heiner Franssen, Managing Director, LIC Asset Management GmbH from the US, was one of them: "EXPO REAL offered us an exceptional opportunity to meet with senior-level contacts, critical to our business, across every sector of the international real estate investment market including service providers, consultants, investors, and lenders." Georg Schlegel, Managing Director, Choice Hotels Europe and one of the many new exhibitors taking part in the "World of Hospitality" joint stand, was also enthusiastic: "My impression is that the stand enjoys very high acceptance and has established itself as the rallying point for the industry at EXPO REAL. For us it is an opportunity to take part in EXPO REAL in a very cost effective way."
 
For Barbara Ettinger-Brinckmann, Chair of Germany´s Federal Chamber of German Architects, the conference forums were a real highlight. She is keen to see architects play a bigger role here: "EXPO REAL is an important trade fair, which is a must for architects and town planners. We should become even more closely involved because everything that is center-stage here would not be possible without our planning input. That is why the forums are very important for us – they stimulate further thinking."
 
This year´s success is already prompting some exhibitors to think ahead to EXPO REAL 2014. One such is Christa Thijssen, Director of Holland Property Plaza, from the Netherlands: "The positive mood of so many real estate professionals attending EXPO REAL in only three days encouraged us to now already start the preparations for our seventh participation in EXPO REAL. For us, EXPO REAL is really the place to be!" 
 
Out of the total of 36,000 participants, 18,600 were trade visitors (2012: 18,911) and 17,400 were representatives from the exhibiting companies (2012: 17,238). The top ten among the 68 countries of origin among the visitors were, after Germany, and in this order: Great Britain, the Netherlands, Austria, Switzerland, France, Russia, Poland, the Czech Republic, the US and Luxembourg.
 
 
 
EXPO REAL 2013 – Positive outlook for the market
 
The strong property markets in Central Europe, and in Germany in particular, have prompted a positive mood at EXPO REAL, despite differences in development between individual countries. For the 36,000 participants in EXPO REAL, the 16th International Trade Fair for Property and Investment, the focus on all three days was again firmly on networking and business.
 
Business is certainly what EXPO REAL is all about for Torsten Knapmeyer, Managing Director of Deka Immobilien and WestInvest: "We use the trade fair to exchange news and views with our business partners about the current situation in the industry. The numerous events at the trade fair also afford the opportunity to get an idea of what other market participants think about how the property markets are developing. Traditionally, EXPO REAL has proved to be a good place to discuss transactions."
 
Jan-Willem Bastijn, Head of EMEA Capital Markets at Cushman & Wakefield, UK, comments: "There was a positive atmosphere at EXPO REAL 2013 – we are on the brink of a turning point. The mood is continuing to improve and we are seeing an increased willingness to do business right across the board." Teresa Dreo, Business Unit Manager Real Estate Germany at Unicredit Bank AG, Germany, agrees: "For us as a property financier, EXPO REAL, the International Trade Fair for Property and Investment, is the most important trade fair bar none. With our focus on Central and Eastern Europe, especially Germany, we see EXPO REAL as the ideal networking platform for these markets. The continuing keen interest in German property is clearly reflected in the positive mood at the trade fair and contributes not insignificantly to its overall success." 
 
This year, as well as the classic markets of Central and Western Europe, many countries from Eastern and Southeastern Europe were also represented. Commenting on this, Irina Babyuk, Chairwoman, Committee for Investment of St. Petersburg, Russia, said: "In view of the increasing competition for investors among regions and cities, it is necessary to develop their investment potential. As an attractive business platform, EXPO REAL provided St. Petersburg with the opportunity to demonstrate this potential. During the trade fair we presented the city’s projects which aroused interest among European companies. It is important to note that we have signed two agreements worth 1.7 billion euros." 
 
The presence of the entire value-added chain in the property sector impressed many first-time exhibitors, too. Heiner Franssen, Managing Director, LIC Asset Management GmbH from the US, was one of them: "EXPO REAL offered us an exceptional opportunity to meet with senior-level contacts, critical to our business, across every sector of the international real estate investment market including service providers, consultants, investors, and lenders." Georg Schlegel, Managing Director, Choice Hotels Europe and one of the many new exhibitors taking part in the "World of Hospitality" joint stand, was also enthusiastic: "My impression is that the stand enjoys very high acceptance and has established itself as the rallying point for the industry at EXPO REAL. For us it is an opportunity to take part in EXPO REAL in a very cost effective way."
 
For Barbara Ettinger-Brinckmann, Chair of Germany´s Federal Chamber of German Architects, the conference forums were a real highlight. She is keen to see architects play a bigger role here: "EXPO REAL is an important trade fair, which is a must for architects and town planners. We should become even more closely involved because everything that is center-stage here would not be possible without our planning input. That is why the forums are very important for us – they stimulate further thinking."
 
This year´s success is already prompting some exhibitors to think ahead to EXPO REAL 2014. One such is Christa Thijssen, Director of Holland Property Plaza, from the Netherlands: "The positive mood of so many real estate professionals attending EXPO REAL in only three days encouraged us to now already start the preparations for our seventh participation in EXPO REAL. For us, EXPO REAL is really the place to be!" 
 
Out of the total of 36,000 participants, 18,600 were trade visitors (2012: 18,911) and 17,400 were representatives from the exhibiting companies (2012: 17,238). The top ten among the 68 countries of origin among the visitors were, after Germany, and in this order: Great Britain, Austria, the Netherlands, Switzerland, France, Russia, Poland, the Czech Republic, the US and Luxembourg.
 
The next EXPO REAL takes place from 6 to 8 October 2014 in Munich.
 
Further information: www.exporeal.net

on October 25, 2013