Real I.S. sees market recovery, cautious optimism ahead

Germany's leading real estate asset manager Real I.S. sees a slight market recovery with increased transaction activity compared to the previous year.

Christine Bernhofer 

Speaking to CRE Media Europe in Munich, CEO Christine Bernhofer pointed out that transactions are often driven by occupants acquiring neighbouring properties or sellers needing liquidity, leading to good properties being sold at reasonable prices.
She expects further improvement due to government programs focused on defense and infrastructure, which could positively impact the office sector.
According to Bernhofer, the trend of reducing office space seems to be stabilizing as companies adopt hybrid work models, but AI could influence space requirements in the coming years. For its part, Real I.S. is exploring AI to streamline real estate proposal generation and investment decisions. 
Overall, she believes that economic growth is necessary for market improvement, particularly in the office, retail, and parking sectors, while logistics and residential sectors are performing well due to scarcity.
Real I.S. is involved in an Irish residential fund facing growth challenges due to housing shortages, despite government support. The fund offers attractive returns, and the residential market is expected to grow, especially driven by defense-related needs.
Reshoring trends are also boosting the logistics sector in Europe as companies move away from "just in time" inventory models. Office spaces in prime locations remain attractive, particularly for ESG investments, as higher rents can justify the cost, according to Bernhofer.
While some clients are interested in hotels due to their recent performance, Real I.S. focuses on hotels in strategic locations, such as Barcelona, where new hotel construction is restricted.
Bernhofer notes that companies have adjusted to the current market conditions and are focusing on their strengths. Real I.S., backed by its stable shareholder Bayerische Landesbank, is a "plus investor" with a high occupancy rate of 95%. Relying on permanent fees, Real I.S.  does not need to pressure sales or acquisitions to improve its balance sheet.
She also highlighted a trend where large, single tenants are reducing their leased space, requiring landlords to invest in reconfiguring properties for multiple tenants, leading to more intensive and technical asset management.
Bernhofer revealed that Real I.S anticipates closing one or two deals, likely in the residential sector, within the next year, with potential announcements in the last quarter. 
“The feeling here at the fair is more optimistic. Everybody has learned to adjust to the new times”, she concluded.

Branislav Pekić