Sector

Real Estate

 

Real estate is characterised as a tangible asset with real substance and is considered a comparatively defensive investment. In the past ten years of a super cycle, the strong market activity and volumes, driven in particular by low interest rates, continuous price increases and thanks to very robust demand, were present in almost all real estate sub-segments with high financing activities and large transaction volumes. 

 

Date: May 2024     Type: Executive Summary

Recent Developments

Due to the recent market environment, however, property transactions are very complex and challenging in view of the sharp rise in interest rates, higher construction and energy costs, increasing competition and the need to optimise or maintain existing financing. In addition, a large number of insolvencies among project developers, construction companies and relevant suppliers - including major ones - along the entire value chain are having a negative impact on the outlook and expected development of the sector. Positive signs are recognisable, but intensive evaluation and comprehensive preparations are currently required for successful new projects and transactions.

 

In the various real estate sub-segments, we provide support in the preparation and implementation of purchase/sale transactions, as well as (re-)financing advice through to fundraising activities, for the realisation of individual and portfolio transactions - both in healthy, stable and challenging restructuring situations. Our clients are institutional investors, asset managers, companies and family offices. Depending on the type of property, we cluster the focus of our activities according to region and type of property use, including

 

  • Residential property
  • Office property
  • Commercial and industrial property
  • Logistics and retail property
  • Property project developers
  • Sale and lease back transactions

 

 

Sale & Lease Back Transactions (SALB) are also a particular focus in the context of corporate financing: SALB is a very interesting instrument for generating liquidity, both for growth plans and reorganisation/restructuring situations.

 

Alternatively - on the basis of various structures - companies can also focus on capital commitment and balance sheet management in order to optimise rating-relevant ratios, for example, and thereby open up new financing options. This can be realised very well for both healthy and ailing companies or companies undergoing transformation.

Uncertainty has a firm grip on the property industry in particular, which has been spoilt by success for many years: a sharp rise in interest costs, c…

Uncertainty has a firm grip on the property industry in particular, which has been spoilt by success for many years: a sharp rise in interest costs, corrective valuations, insolvencies of major project developers/construction companies, restrained financing activities on the part of previous financial partners, a sharp rise in construction costs, increased regulatory pressure and a challenging geopolitical situation with far-reaching consequences and a high level of complexity. However, challenging times also offer opportunities - let's talk.

Both the macroeconomic environment and (regional) market factors relating to individual properties and innovative action have a considerable influence…

Both the macroeconomic environment and (regional) market factors relating to individual properties and innovative action have a considerable influence on the property industry in terms of company valuation: composition, future focus, energy efficiency, competitiveness of the property portfolio and the project pipeline play a key role. At the same time, digital topics and services are becoming highly influential.

The right choice of location, reliable and flexible financing, the quality of the property, the management of rental losses and the consideration of m…

The right choice of location, reliable and flexible financing, the quality of the property, the management of rental losses and the consideration of market cycles continue to be decisive success factors. In the future, the digital mindset in particular, including the processing of data and increasing automation with the help of digital solutions to realise time savings, efficiency and security in construction and real estate projects, will represent further success factors.

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Trends

 

There are generally growth opportunities in individual sectors and geographical submarkets, although there will also be investment and divestment opportunities in crisis situations and portfolio reorganisation efforts.

There will be a particular focus on property strategies in an environment of higher interest rates, a focus on high-quality properties, changing demand structures in submarkets and a challenging valuation environment.

 

The real estate sector is also currently seeing progress in the use of big data solutions, building automation and artificial intelligence (AI) for property transactions, property and portfolio management, including due diligence, as well as valuation and the optimisation of operational management.

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Expert Opinion

Prospects for success in the sector

 

The construction industry and the real estate sector in general are extremely promising and are undergoing major changes due to new trends such as green buildings, property technology, machine learning, 3D printing and increasing digitalisation and efficiency. These trends are having a positive impact on the sectors and form the basis for a sustainable transformation.

In the construction industry in particular, growth potential is heavily dependent on persistent interest rates and construction costs. This increases the pressure to consolidate, especially for small and medium-sized companies in the construction industry.

Other factors also play an important role, such as innovative materials and (partially) self-sufficient energy solutions to optimise the ecological footprint. Advanced technologies such as Building Information Modelling (BIM) and PropTech approaches are also becoming standard.

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The real estate sector is facing challenges. At the same time, it is an exciting market with promising growth forecasts that are continuously increasing in demand. The focus on sustainable issues is also giving it a boost.

Christian Saxenhammer
Managing Partner

Ihre Ansprechpartner

 

Saxenhammer verfügt über fundierte Fach- und Branchenkenntnisse und kann auf ein breites Netzwerk

von Industrieexperten zurückgreifen, die langjährige Transaktionserfahrung gesammelt haben.

 

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