19. March 2018 - altii
Exiting is an Option
Individual business plans used by investors on the German real estate markets can differ greatly. Hence, it can be very difficult to make general statements about an ideal investment approach. This makes it all the more important to analyse the basis of one’s own business plan as well as the status quo of one’s assets.
Market participants planning an exit within the coming years may benefit from pulling it forward rather than delaying. The signs of change are becoming clearer as prices on some real estate markets have plateaued. The best example being high-street retail real estate in prime German metropolitan locations. [,,,]
This article was originally published in German only. A summary in English is available.
Summary
The article begins by analysing the lack of growth potential in German prime real estate. Many inner-city locations do not offer any value-add property anymore. Furthermore, the retail real estate market in general is currently subject to structural change. Due to growing online trade, many retailers are changing their strategy and moving away from their traditional store front business model. While these changes will not necessarily have a negative effect on the market, tenant changes may lead to lower rent prices and therefore lower the overall object value. The article also poses the possibility of a change in central interest rate policy. Should fixed-interest government bonds become more favourable due to a shift in interest rates, the general market climate may also change. In summary, the article advises those who are already considering exiting the market to do so sooner rather than later in order to take advantage of the currently favourable market conditions.
