Germany Digitalisation to the rescue

The first question in the most recent Trendbarometer survey on the outlook for the rest of the year shows the calm mood of the industry that apparently now prevails when it comes to talking about the situation. 71 pct of the respondents said they do not believe the dry spell is over yet. However, only 8 pct expect the situation to take a turn for the worse, and 21 pct believe we have hit rock bottom and that things can therefore only get better.

The real estate industry must address a number of challenges in order to ensure a successful turnaround that lasts. These include climate change, an ageing society, increased migration into cities, changed consumption habits and rapid technological progress. Berlin Hyp therefore wanted to find out if companies in the real estate industry are ready for this. The response to the question “How would you describe the level of the industry’s willingness to change?” shows a balanced view. While 42 pct rate the “willingness to change” enquired about as “rather high”, 53 pct of the respondents deem it to be “rather low”. Interest rates, inflation and higher construction costs have been the focus of discussions in the real estate industry as of late. However, further risks also persist on top of these, and they are possibly being neglected in light of the crisis.

The answers to that question are “Shortage of skilled labour caused by a brain drain and demographics” (61 pct), followed by “The development of infrastructure for renewable energy is progressing too slowly” (52 pc), “Refinancing risks and equity gaps” (51 pct) and “Decline in employment in the construction industry” (42 pct).

We now need to address not only current issues such as interest rates and inflation, but also the more extensive industrialisation of the construction value chain, making processes faster, less expensive and more flexible. Furthermore, we have to seize the opportunities offered to us by the energy transformation, for example. In this regard, investment in our country’s energy infrastructure is just as urgently needed as investment in the existing properties themselves, if not even more. It is thus no longer possible to view infrastructure and real estate as two separate things.
Sascha Klaus, chair of the Board of Management of Berlin Hyp

Countering the shortage of skilled labour with programmes for older employees, The Trendbarometer question “How can the real estate industry protect itself against the loss of skilled labour?” was meant to shed light on ways to counter the lack of skilled labour. 50 pct of the respondents chose “Accelerate the digitalisation processes” as the most important way to compensate for a lack of employees.

In addition to demographic developments, the increase in urbanisation has caused a lot of societal problems. For example, the large number of people migrating to cities and large metropolitan areas are facing a housing shortage. New residential construction is
experiencing a fundamental crisis. Therefore, Berlin Hyp asked the real estate professionals what would need to happen for residential construction to recover. The top answer, “Less red tape” (73 pct) did not come as a surprise; “Fewer construction-related constraints and regulations” (59 pct) and “More serial and modular construction” (47 pct) came in second and third, respectively.

The transformation of city centres may offer further potential in terms of a solution to the housing shortage. City centres now have a number of vacancies for office and retail properties, in some cases even in prominent locations. That is why Berlin Hyp asked “How can city centres and city district centres be transformed in a meaningful way?”. “Reutilisation of large store spaces” (61 pct), “Redensification for more housing” (49 pct) and “Adjusted infrastructure” (48 per cent) seem to be equally relevant.

Digitalisation remains a hot topic for the real estate industry. Real estate professionals rate “Building information modelling” (55 pct), “Artificial intelligence” (43 pct), “Cloud technologies” (31 pct) and the “Internet of Things” (31 pct) as particularly relevant for the industry’s future.