Forecast report analyses top trends impacting commercial real estate in 2020

• Real estate sector being shaped by low interest rates, the search for answers to climate change, and changing living spaces and work environments

• Thanks to the boom in office leasing, Germany’s commercial real estate market is topping European league tables for 2019, with transactions totalling EUR 70 billion in total value

• Major opportunities for the real estate industry in 2020 to help shape the future of cities through responsible investing

 

Toronto / Frankfurt – Low interest rates, growing calls for sustainability in the face of advancing climate change, and shifts in living spaces and working environments – these are just three of the global trends facing the real estate industry in 2020. In its global 2020 Forecast released today, international real estate services firm Avison Young analyses the top megatrends which will drive the capital markets and real estate markets over the coming year. Although its analysis starts from a global perspective, Avison Young also highlights particular challenges within local markets. A total of 72 markets in North America, Europe and Asia are examined in detail, including the German five largest metropolitan areas: Berlin, Dusseldorf, Frankfurt, Hamburg and Munich.

 

Among the trends impacting real estate strategies and business identified by Avison Young:

 

• Lower for longer: How investors are dealing with a low inflation, low interest rate world.

• Building resilience: Cities across the world are leading the charge in responding to climate change, to ensure economic, social and environmental sustainability

• (Place)making an impact: Placemaking is becoming the focus of socially responsible investors looking for impact investment opportunities.

• Power to the people: Landlords, developers and occupiers need to pay increasing attention to local political activism, as today’s street protests increasingly signal tomorrow’s policy initiatives.

• (De)globalization: The pace of globalization is slowing, and in some areas is starting to reverse as nearshoring and the localization of supply chains gathers momentum.

 

“Though uncertainty remains throughout the world, our forecast reveals that opportunities remain across all sectors – driven by an increased focus on responsible investing, climate change, the implications of continued low interest rates, and other factors”, said Dr. Nick Axford, Global Head of Research for Avison Young.

 

Germany remains a focus of investors – major opportunities within the sector

 

Thanks to the country’s solid economic performance, low unemployment rate and political stability, Germany’s real estate market continues to be an investment focus for both domestic and international investors. Driven by sustained very low interest rates, and in particular by the boom in the office leasing markets in the country’s five largest metropolitan areas, Germany’s investment market for commercial real estate topped the European league tables in 2019, with transactions totalling approx. EUR 70 billion in value completed during the year. “And there’s no end in sight,” said Inga Schwarz, Head of Research Germany. “We expect strong demand and high investment inflows to continue in the commercial property market during 2020. The continuing shortage of supply and the scope for further rent increases make Germany’s office segment particularly attractive.”

 

According to Avison Young, the focus of investors within the German market continues to be in the country’s five largest cities. Like major cities elsewhere, these are facing challenges during 2020 including population growth and the need for viable new infrastructure and mobility solutions. At the same time, these cities are facing political and societal demands for greater sustainability and social justice. Already in 2019, these themes were gaining significant attention, for example in the form of the Fridays for Future movement and the heated debates in Germany about rent control in Berlin and other cities. 

 

“In view of these pressing development needs, urban planning will have to change,” continued Inga Schwarz. “Fresh ideas and bold actions will be needed to create new kinds of living spaces and working environments. For the real estate industry, this means big opportunities: By investing responsibly, investors can not only play a key role in shaping the future of cities but also contribute to greater sustainability and social justice.”

 

To access global, national and local forecasts from across the Avison Young network, please visit: 

www.avisonyoung.com/2020-forecast

 

The forecasts for Germany’s five largest cities may be found on the company’s website:

avisonyoung.com/2020-forecast#Berlin

avisonyoung.com/2020-forecast#Dusseldorf

avisonyoung.com/2020-forecast#Frankfurt

avisonyoung.com/2020-forecast#Hamburg

avisonyoung.com/2020-forecast#Munich