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Expert opinion – Two scenarios are possible for real estate investments after the Corona crisis

The corona crisis is increasingly developing as a test of patience and a question of trust in one’s own investments, this applies especially to the property market. The market seems frozen at the moment, so the real estate boom seems to be over. However, experts speak of two possible, long-term scenarios for the real estate market.

The real estate market is paralyzed

The corona crisis is weighing heavily on the global economy, investors are unsettled and do not know which investment to trust. This also applies to the real estate business, which is often praised as “concrete gold,” so the crisis could develop into an ordeal on the real estate market.

Open-ended real estate funds are falling in value, institutional investors and housing companies are pulling the brake on rental prices for the time being so as not to put additional strain on tenants’ solvency.

President of the real estate association BFW, Andreas Ibel, commented on the situation in an interview with BÖRSE Online with the words: “There are delays on construction sites and in planning and approval procedures, rental deferrals and a sharp decline in demand.” This could be the beginning of the end of the real estate boom as the industry has not seen price growth for the first time in many years.

Fall in demand on the real estate market

According to experts, the uncertainty among investors is justified, and the financial bottlenecks caused by the crisis for companies and private individuals are causing the demand for real estate to decrease for the time being.

“There are fewer transactions now. Visits to the apartment can no longer take place, nor can notary appointments. In a phase like now […], major investor decisions or even moving to a larger apartment will be put on hold for the time being, ”Michael Voigtländer, real estate expert, explains the situation on the real estate market.

Nevertheless, with a few exceptions, real estate prices will remain at least relatively stable, some experts predict. Although one can expect certain declines, no significant price drop is expected for residential properties in metropolitan areas. This is how a possible scenario on the real estate market is described.

Experts speak of two possible scenarios

The fact is, the demand for a home will decline, even if construction loans are currently particularly cheap, many borrowers will currently lack the necessary equity to make such an investment.

“F + B expects market development to normalize once the Corona crisis has been overcome to some extent,” explains F + B Managing Director Bernd Leutner in an interview with BÖRSE Online.

According to this, real estate investments would continue to be worthwhile in the long term; favorable interest rates and high rents result in a relatively positive investment return. Accordingly, institutional investors in particular could benefit from the crisis; they can now invest in residential real estate at a significantly lower price than in the past.

The global real estate market remains attractive. grundbesitz global invests worldwide in commercial real estate from the areas of office, logistics and retail. Why this is interesting for private investors.

But a second scenario would also be possible if the global economy did not recover quickly enough and entered a sustained recession, then real estate inquiries would also decrease further. “With every new negative report, the willingness to buy real estate decreases,” assesses Franz Eilers, vdp researcher, the current situation compared to Haufe.

He adds, “The corona shock will therefore indirectly brake the tendency to invest in real estate.”

Image sources: WHYFRAME / Shutterstock.com

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