"Post-quarantine transformation in real estate" - interview with Joerg Baehren, FIABCI Global Expert
Today we speak with Joerg Baehren - director of projects in RERise Gmbh, Germany, FIABCI-Ukraine member.
The main topic which is actual now in the whole world is COVID19 pandemic and Post-quarantine transformation.
FIABCI: What, in your opinion, is being transformed first in the market and what will not be affected at all and will continue to work as it did before the pandemic?
JB: I expect the pandemic to have a long-term impact in all areas – negative as well as positive.Digitalization will become even more important. We found out that it is also possible without a meeting room ... this is now replaced by a screen. Internet, IT companies, video conference providers and PropTech-Companies will be one of the winners.In my opinion, tourism will suffer the greatest damage.
People will be more careful with travelling - suddenly it's nice at home.
Airlines will consider further cooperation or will disappear from the market. Business trips will be reduced to an absolute minimum, which will also hit the hotel industry hard.The medical industry will get an incredible push. Masks, gloves and disinfectants will become the standard repertoire of shops and offices. Governments will create incredible storage space for these items in order to be more prepared for later waves or even new viruses.The real estate market is currently at a standstill. The transaction numbers have massively slumped. I firmly believe that the real estate market will be hit entirely - less in the residential area, significantly more in the commercial area and in tourism real estate.
The real estate world will have to adapt to new challenges and requirements. Logistic will be a winner – more Storages will be needed.
Companies will rethink their office spaces ... suddenly the home office has its reason to exist more than ever - and it works! The private tenant or buyer will make sure that there is enough space for the desk or even a third or fourth room to be able to work in the home office .... and then it is no longer possible without a balcony or terrace. Perhaps they are even thoughts in the direction of a multi-generation house again ... health and family are the most important thing.
FIABCI: How do you think the business will change in your professional area? JB: Previously, sales partners or even potential investors were invited to get an idea of the investment on site. In future, advertising for investors will begin with a visit by computer instead of a personal appointment. It continues with online presentations and a live broadcast to examine all corners of the asset with a drone. Finally, a fund subscription is sealed paperless with the digital signature. The distribution of funds is put to the test. Since the beginning of the crisis, all seminars, conferences and other sales events have been cancelled. If any, customer appointments only take place online. However, this can mainly be done with regular customers or at least with known customers. This is more difficult with a first approach. In addition, investors are currently licking their own wounds. They either try to keep their losses as low as possible or reallocate. It is not yet clear where the journey is really going. But I expect investor behaviour to change.
Financially strong investors will increasingly focus on opportunity- and value-add-funds, while smaller investors are likely to opt for the stable, liquid variant. What some see as a crisis, others see as an opportunity.
FIABCI: What advice as an expert on the real estate market of your country can you provide to foreign and local real estate investors in your local market? JB: I am convinced that Germany will remain an attractive location for long-term investments with low but stable returns.
Nevertheless, I assume that property prices will drop by at least 25% in the next few months.
This will mainly affect residential real estate. In the long term, Germany will remain a safe haven for investors.
FIABCI: What new business tools do you think should be mastered by specialists in your profile? JB: I think we have to coordinate more closely with potential investors in my area and react even more flexible to changes. The risk profile of an investor and of an investment will have an even greater role.
A risk aspect - the complete lock down - has been added that was therefore not predictable.
As a result, to see more outside the box, to consider even more abstruse probabilities. Therefore a kind of "risk creativity" will be indispensable for me. I see this as a central business tool in my industry in the future.
FIABCI: What, in your opinion, new needs may arise from market customers, will require new services and products from specialists in your profile?
JB: To be honest, I don't have an answer yet
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