Is the real estate party really over?

As the delegates arrived at EXPO Real in Munich Messe first thing in the morning on 7 October 2019, they were greeted with a free copy of the Immobilien Zeitung (the German equivalent of the Estates Gazette) which was being handed out as they arrived.  The front page article was entitled "Is the real estate party over?" and started with the lines "Expo Real has now grown to a size this year where it occupies seven halls at the Munich Messe. The last time EXPO was this big was in 2008, almost exactly at the time Lehman Bros collapsed". 

Despite that rather gloomy welcome, there were still strong indications of enthusiasm for development and investment in real estate across Europe, albeit not in every sector.  No-one seemed to be particularly talking-up any positives of investing in retail, preferring to talk about riding out the storm, diversifying portfolios and the replacement of "stuff in shops" with the "experience economy" in the high street and in shopping centres.  In Germany in particular, residential development and investment had been hit by the tightening regulation of the private rented sector which was regarded as providing too many barriers and not enough incentives – a warning that any incoming UK government would do well to heed as a potential threat to the supply of new housing.

There was a notable increase in exhibitors from the hospitality industry which, unsurprisingly to those familiar with its counter-cyclical nature and in the face of decline in almost every other sector, still registered year-on-year growth in investment in the last financial year.  There was however an evident retrenchment to larger, branded, hospitality assets in core areas like city centres and airports and a marked lack of enthusiasm for smaller assets and those in secondary/tertiary locations.

There was a whole section in the new hall Nova3 devoted to "Proptech" which took in all kinds of technology like integrated buildings and facilities management systems, 3d visualisation of property, drone surveying and mapping and security for the "Internet of Things".  Property management and distribution systems, which are already well-established in operational real estate like hotels, are branching out into other sections of real estate like co-living, student accommodation and care homes.   London and Partners was very visible, with its energetic new director, Neil Brigden, actively engaging with international investors and promoting London as a city very much still open for business, and in particular hosting Europe's leading proptech event Future Proptech in May next year.

The "B" question was always a theme on which UK delegates were expected to form a view (whether it was Brexit or Boris). There seems to be a confidence among global investors that whatever setbacks in the short term result from Brexit, the UK remains a good long-term prospect and will snap-back into a close trading relationship with the EU-27 and EEA states, however it is structured in the future. 

There was an anticipation amongst foreign investors that a sudden sharp drop in the pound could produce some bargain-priced acquisitions for those with the cash to move quickly. I knew there was a silver lining to that particular cloud...