Cautious optimism, or itchy feet?
The real estate world descended on Munich last week for the annual Expo Real show, and there was as much talk about getting back to action as there was playing cards close to chests.
According to show organisers, Messe Munchen, the annual fair saw around ‘42,000 attendees from more than 70 countries and 1,742 exhibitors from 34 nations, that’s an increase in overall visitors and 5% increase in international attendees compared to 2024.’
Despite this increased attendance and the feelings of positivity that came with it, there was a slightly subdued mood in the halls.
One of the largest European pension fund investment managers told me that in a normal year they would look at around 40 major deals, and last year they only looked at five (5), a massive drop.
Despite the headwinds, though, there was a palpable impatience among everyone to put the cash piles that have been building up to good use.
But rather than extravagance and chest-beating, people were more apt to focus discussions on untangling thorny deals, working out financing packages, and digging into market research and local planning issues to really understand the locations and assets they are aiming to buy or develop.
Try your luck!
And if you couldn’t make the deals the old fashioned way, there was even a roulette table on which to try your luck! Nothing like a bit of fun mixed with business.
Highlights for me this year:
Most active sectors seemed to be logistics, data centres, living (BTR, student and senior), and TODs (transport-oriented developments)
Affordable housing – it is a problem Europe-wide (indeed worldwide), and must be addressed by all governments. Expo’s ‘Flexible Housing’ exhibit and talks on this were an interesting addition this year.
Life sciences continues to impress, on the back of increased medical and pharmaceutical R&D funding in the post-pandemic world
Plenty of talk about offices in prime locations with good stories, but anything else seemed a struggle. Real worries about stranded assets due to more stringent energy-saving standards combined with lack of demand.
‘Experience economy’ of interest – i.e. leisure, F&B, entertainment – particularly from retail developers looking to widen their game and reconnect with customers/visitors/guests
Lots of interest in Spain/Portugal and Italy, particularly from the logistics and data centre crowd
Retrofit/reuse – while it wasn’t necessarily a highlighted topic at the event, all the investors and developers I spoke with – and whose ears I bent about our Don’t Waste Buildings campaign – agreed that the reuse/upgrade of existing building stock must be an increasing portion of the future development mix if we are to stay within carbon budgets, hold down costs, stimulate economies, facilitate innovation, provide local jobs and meet housing demand much more quickly.
Sustaino, the sustainability AI robot!
Despite real estate’s challenges, some new research by Savills reveals that the market globally is the largest single asset class, clocking in at US$393.3 trillion in value – larger than equities/stocks, bonds or gold, and nearly four times larger than global GDP.
Europe’s slice of that pie is around $55 trillion, with $14.2 trillion in the UK.
Additional recent research from New London Architecture benchmarks the built environment sector (including real estate, construction, infrastructure and related professions such as architecture, engineering, etc.) as contributing 24% GVA to the UK (£568 billion – twice the size of the financial sector) and accounting for 1 in 8 jobs (3.8 million people).