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The Berlin Hyp Trendbarometer survey: The slowdown in the real estate economy poses the challenge of increasing financing costs, but it also offers opportunities for energy transformation
20 October 2022
The real estate industry is facing major challenges
70% of survey participants believe that rising financing costs will have a significant impact on the real estate industry in the coming years. For 58% of respondents, the increasing energy costs are the greatest challenge, followed by supply chains at 28% and staff shortages at 23%. Other factors are seen as less crucial, such as general geopolitical risks (23%), the availability of financing (19%) and the availability of space (19%), the regulation of taxonomy compliance (13%) the achievement of taxonomy compliance (13%) and a declining demand for real estate (9%). These results show that the industry is on the verge of a major turning point and is being challenged to adapt to the changing environment.
“The real estate financing market was very stable until the geopolitical upheavals, however since the beginning of the year, the interest burden in commercial real estate financing has been increasing significantly. As a result, we are seeing transactions being postponed or recalculated”, says Sascha Klaus, Chair of the Board of Management of Berlin Hyp AG. “However, a large part of the real estate industry is well positioned, it has become more modern, more resilient and more innovative”, he adds.
The slowdown in the real estate economy also presents opportunities
Nearly half of all survey respondents (48%) believe that the slowdown in the real estate economy will drive energy transformation. This may seem surprising in light of the current supply crisis, especially since the energy transformation involves considerable costs, at least in the short term. “We are convinced that right now, a commitment to energy transformation is of great importance”, says Sascha Klaus. “Whether it’s in new construction or in existing buildings, the energy crisis will fuel the trend towards energy optimisation. In principle, there is enormous energy-saving potential in the portfolio, and real estate with poor energy efficiency will be more difficult to market in the future. This is why we cannot let up on our efforts right now, as this would be falling short of the present challenges in our view.”
39% of respondents expect that the price increase for material and construction costs to slow down and 35% assume that there will be more free capacities at construction and trade companies again. Regarding the opportunities that the slowdown in the real estate economy may present, 32% believe that this will lead to a stronger focus on quality, whereas 28% see the opportunities in accelerated structural change. 18% see this chance in an easier diversification of the portfolio due to favourable entry opportunities, while another 18% believe the chance is in the value of real estate expertise. 4% of survey respondents do not see any opportunities in this regard.
The recovery time frame for the real estate economy is still unclear
Opinions differ when it comes to determining the time frame for the real estate economy to recover from the energy crisis and the war in Ukraine. In view of current events and the ever worsening situation, this is not surprising, and it is proving to be very difficult to determine a time frame for this. 62% of the survey respondents expect the real estate industry to recover after three years at the latest. Of these, 32% consider a time frame of two to three years to be realistic, 23% forecast one to two years and a very optimistic minority of 7% believe that the real estate sector will recover within one year. 37% of respondents predict a longer time frame of recovery. 21% of survey participants assume three to five years and 10% consider a period of five to ten years to be realistic. 6% forecast a longer period than ten years and another 6% predict an unforeseeable period.
About the Berlin Hyp Trendbarometer survey:
Berlin Hyp has been publishing the “Trendbarometer” expert survey for nine years in a row to date. As part of this survey, real estate experts from Germany and abroad comment on their expectations of the real estate business in the coming year. It provides an assessment of the German real estate market in the current real estate year and a perspective for further development. More than 430 real estate experts participated in the current survey.