Persistently high interest rates and the resulting fall in market values are βstill a big issueβ for the European real estate investor, according to Gerhard Lehner, head of Germany at Savills Investment Management.
βThey affect all asset classes, but to different degrees,β he explained, adding: βWhile the risk/return profile in the logistics sector is currently very attractive and there are also attractive investment opportunities at adjusted prices in the residential and food retail sectors, we see a βflight to qualityβ in the office sector.β
Here, βnew forms of work require modern office inventory and strategic asset management as well as selective investment strategiesβ, he suggested. βThe key criteria in this area are flexibility and user orientation. Good accessibility is extremely important, but so is the recreational quality in and outside the office.β
Looking forward, Lehner said that βthe question of how investor behaviour will developβ remained a matter for βconcernβ. He said: βWe have observed great reluctance among investors to make new investments over the last 18 to 24 months. But there are some who see the current developments as an opportunity and benefit from attractive investment opportunities.β
Lehner suggested, however, that investors were likely to return to the market before too long. βInstitutional investors, such as pension funds or insurance companies, have an ongoing need for investment opportunities that offer long-term, stable returns,β he said.
βThere are exciting investment opportunities emerging - particularly in sectors with solid long-term fundamentals and sustainable rental growth, and in properties that fulfil user requirements and ESG criteria.
βWe see attractive investment opportunities at adjusted prices in the residential and logistics sectors and also in the food retail and real estate debt sector. In addition, top offices in central locations in European capitals remain attractive.β
