Demographic change is shaping the 2020s and continues to ensure high demand for real estate



  • Interest rates remain low, prime property yields fall

  • Persistently high demand for rental space and high transaction volume

  • Japanese conditions expected for Germany


Hamburg, January 8, 2020Warburg-HIH Invest Real Estate GmbH (Warburg-HIH Invest) provides a compact overview of the national and international investment and rental markets in its current market information. Professor Dr. Felix Schindler, Head of Research at Warburg-HIH Invest, assumes that the ongoing demographic change will lead to an increased demand for safe, stable investments and, due to the structure, will ensure low returns on the capital markets.

"Real estate will remain a sought-after asset class in the 2020s as well," said Schindler.


As Schindler emphasizes, 2019 ended with a spectacular year-end rally, which set new records for the real estate markets in several ways - despite or precisely because of the economic and geopolitical uncertainties.

"These general conditions and the low interest rate environment will continue to accompany us at the beginning of the new decade and should ensure that prime yields on the real estate markets remain low, sometimes below 3.0%," explains Schindler.


With a view to the macroeconomic framework, the economist expects an ECB key interest rate of unchanged at 0.0 percent for the current year and GDP growth for the euro area compared to 2019 as well as and continued low inflation below the 2.0% mark. If the economic situation in the euro area deteriorates significantly, the ECB may even cut interest rates further.For the real estate investment markets, Schindler continues to expect low yield levels combined with high competition for core properties. "After Brexit, Great Britain has some catching up potential in Europe," says the researcher.For Germany, Schindler expects the transaction volume to remain at a historically high level, while the prime yield, especially for offices, remains in descent. But prime yields of less than three percent are in an attractive range compared to 2/3 of the interest on federal bonds.With regard to Europe, Schindler sees Asian investors continuing to advance. After this group of investors had focused heavily on London in the past, a shift in the focus of investment towards continental Europe can now be seen. The origin of capital is also gaining in breadth. In addition to investors from South Korea and Singapore, Japanese investors with a core profile are also increasingly active in Europe.After this group of investors had focused heavily on London in the past, a shift in the focus of investment towards continental Europe can now be seen. The origin of capital is also gaining in breadth.In addition to investors from South Korea and Singapore, Japanese investors with a core profile are also increasingly active in Europe.After this group of investors had focused heavily on London in the past, a shift in the focus of investment towards continental Europe can now be seen. The origin of capital is also gaining in breadth. In addition to investors from South Korea and Singapore, Japanese investors with a core profile are also increasingly active in Europe.The main reasons are the broader diversification of the property portfolio, which has so far also been very strong on the domestic market. In addition, portfolio effects driven by macroeconomic factors also play an important role for emerging economies in Asia.

There is no prospect of a turnaround this year for the development of the European rental markets. All that is expected is a flattening rent dynamic due to a slight increase in construction activity and weakening economic impulses. "In the top 7 German cities, the high demand for space will continue with a limited supply," says Schindler. He also expects further rent increases in these markets.





"The low interest rate environment will continue to accompany us at the beginning of the new decade and should ensure that prime yields on the real estate markets remain low, sometimes below 3.0%."


"Real estate will remain a sought-after asset class in the 2020s."

About Warburg-HIH Invest


"The low interest rate environment will continue to accompany us at the beginning of the new decade and should ensure that prime yields on the real estate markets remain low, sometimes below 3.0%."


"Real estate will remain a sought-after asset class in the 2020s."

About Warburg-HIH Invest 2


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