There has been much speculation in recent months about the impact of the corona crisis on the property market. But not all myths and forecasts have actually come true.
Expert forecasts and lay myths about the effects of the Corona crisis on the real estate market have abounded in recent months – it was difficult to keep an overview and to assess the relevance of the actually possible consequences. But now there is a little more clarity.
Forecast: “Real estate demand could shift from urban to rural areas”
The “WirtschaftsWoche” published data from ImmobilienScout24 at the end of May, according to which this forecast cannot be answered with a simple ‘yes’ or ‘no’: Apparently, the demand for commercial real estate in major cities such as Berlin and Munich decreased sharply in March – recovered but since then has also been steadily increasing.
However, demand in rural areas rose more than in the big cities, although this is not a significant shift: more than two thirds of platform users continue to state that their search preferences have not changed as a result of the Corona crisis.
Forecast: “Building rates could rise again”
There was a fear that building rates could rise again due to the current economic situation in Germany – however, this has not yet happened. A survey of experts by Interhyp from the beginning of June showed that buyers can still expect low values in the coming weeks despite slightly higher interest rates and that this will probably not change in the medium to long term either.
Forecast: “Logistics properties may experience a boom”
The “Handelsblatt” reports that the first quarter of 2020 was an all-time high for logistics investors: there should have been a transaction volume of 2.5 billion euros in the first three months of this year. Logistics properties became increasingly important during the crisis – so it is likely that the numbers will remain high in the second quarter of 2020.
Forecast: “The office property market could plummet”
There are forecasts that the market for office real estate could collapse due to new home office regulations. This has not been proven to be true – according to the WirtschaftsWoche, ImmobilienScout24 data shows the following:
The supply of rental properties has so far remained stable, while the demand for a 50 percent slump has already recovered almost completely in March. In the area of purchase real estate, both the offer, the exposé views and contact inquiries apparently remained stable.
Forecast: “Hotel properties are hit hardest”
Apparently, investors expect a return to normality in the tourism industry after the Corona crisis: According to the “Allgemeine Hotel- und Gastronomie-Zeitung” (AHGZ), only 3.7 percent of the construction projects in the industry had been canceled by the end of May, which is probably less than initially expected. 13 percent of the hotel construction projects were initially postponed.
So far, the industry has apparently held out reasonably well despite the massive slump in sales – however, what the medium to long-term developments look like and how hard the hotel property will ultimately be hit is difficult to estimate according to the “AHGZ”.
Forecast: “The Corona crisis means the end of the real estate boom”
This myth affects every sector of the real estate market and stems from the fact that the 15th calendar week saw the biggest cut in Germany: According to the analysis company F + B, there were probably 38 percent fewer real estate advertisements.
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In fact, at the same time there were many forecasts (for example from Empirica or Deutsche Bank) that expected a different development: the return to the situation before the massive slumps. In fact, at the end of May, according to the WirtschaftsScoche data from ImmobilienScout24, there were even five percent more real estate offers and almost 19 percent more exposé views than before the crisis.
“WirtschaftsWoche” quotes ImmobilienScout24 managing director Thomas Schroeter with the words: “The real estate market is highly dynamic and is crisis-proof”. Typically, however, economic changes affect the real estate industry with some delay – investors should therefore keep their eyes and ears open.
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