As COVID-19 continues, other issues are coming to the fore

Text: Matthias Pink

Last year, there was only one subject to discuss in a real estate market outlook: the COVID-19 pandemic and its consequences. This year, we have not escaped the pandemic as hoped and, in terms of infections, we have reached new peak levels. Nevertheless, the subject is drifting into the background of the real estate debate as other issues take its place. This is no doubt due on the one hand to an element of pandemic fatigue. On the other hand, however, the most extreme side effects for the real estate markets have subsided. Hotels are hotels again, and no longer alternatives to working from home, and event spaces are no longer merely film studios, to give just two examples.

Such phenomena were an expression of the extraordinary distribution of space requirements that we described in last year's outlook as the peaks and troughs of COVID-19. These have now been left behind at least to some extent. As the short-term consequences of the pandemic fade, the medium and long-term effects will now become increasingly apparent in the real estate markets going forward. We also described these in last year's outlook. And, since we feel validated in our statements in view of developments to date and have, therefore, not added to these substantially for the time being, we would once again refer you to them here.

In this year’s outlook, therefore, we turn to some other specific issues that we believe are particularly worthy of consideration. The first of these issues is the potential consequences of ESG regulation on the investment markets, which we discuss under the title “Flight into new buildings?”. In our second piece, titled “Yields are temporary, security is permanent”, we provide a medium-term outlook for the German residential market and, last but not least, our article “Portfolio optimisation in times of high inflation” deals with the issue of what owners and investors can do to brace themselves against higher inflation.