With every crisis comes opportunity

More exhibitors and visitors turned up than last year for Expo Real 2023, the largest real estate fair in Europe. However, in terms of numbers, the 2019 event remains without doubt the biggest of them all. But this year, the word crisis was being uttered openly. “The real estate sector finds itself facing one of the toughest periods it has seen in a long time. Rising interest rates, stagnating construction projects, inflation – the problems are manifold. And these were among the main issues discussed over the three days by those attending here in Munich, as they exchanged their ideas on what to do next,” commented Stefan Rummel, the CEO of Messe München.

Many pointed to financing as one of the most urgent problems, along with the lack of asset liquidity and the geopolitical uncertainty. Even though many saw the glass as half-empty, others could see new opportunities. This division not only cuts across the different sectors of the market, but also to a large extent (and maybe even more so) different geographical locations. Unlike in Germany, the sentiment in our part of the CEE region is not in the least downcast. The level of demand here, although currently lower than it was, is not going to evaporate any time soon, as expanding markets need new projects and more development, while nearshoring is also benefitting the region. Companies that are in good shape with adequate financial resources will continue to be able to take advantage of the situation. From what was said at the fair, it also seems to be a time for bargain hunting, since the current state of affairs favours price negotiations in preparation for the next boom.

During Expo Real’s many conferences, debates and panels, the topics discussed included ESG, urban development, demographic changes and financing/refinancing. ‘Eurobuild CEE’ was one of the patrons of the events held at the stand of the City of Łódź. The main debates held there included ‘Capital markets – sources of investment financing’ with Bank Pekao, as well as a debate between mayors entitled: ‘How can Polish cities attract investors?’ – featuring a panel that included Warsaw deputy mayor Michał Olszewski, Gdańsk deputy mayor Piotr Grzelak and Łódź deputy mayor Adam Pustelnik. Polish cities and regions were well represented this year. Warsaw, Łódź, Silesia and Bydgoszcz all sent their representatives together with their real estate partners, while Gdańsk was represented by The Gdańsk Economic Development Agency.

In spite of all the beautiful weather in Munich, dark clouds have been gathering on the real estate horizon. “A cocktail of rising interest rates, high construction costs and the political back-and-forth has abruptly brought the sector’s long upturn to an end. And yet the idea that we are now in a perfect storm is mistaken, as user demand remains intact in many segments, while construction and land costs should ease again, and legislators are at least backpedalling a little. It remains unclear if this will be enough for a recovery as early as 2024, but it’s not all bad news, and a trade fair like Expo Real can be a good indicator of this as well,” stated Tobias Just, the managing director and scientific director of IREBS Immobilienakademie.

We will have to wait another twelve months for the next Expo Real, so let’s hope that during this time more predictability and stability will have returned to the real estate market.

Magdalena Rachwald