COVID-19 has forced people to work from home and close stores, affecting the three leading real estate industry sectors: retail, hospitality, and office. Hence, securing an income proves to be challenging for the industry.
Fortunately, the real estate industry is still one of the few investment asset classes to generate favourable returns with low-interest rates. This is particularly true for Europe, mainly in Germany and the Netherlands.
Germany and the Netherlands’ Real Estate Industry
According to PwC Global, there is expected recovery in some of the domestic markets in Europe this 2021 and ahead. The economy’s stability has gained favour in Germany, with Berlin ranking the highest in 2021. This ranking is due to Germany’s practical way of dealing with the virus, which helped the country’s economy in this pandemic.
Berlin, in particular, has a skyrocketing demand for house rents, where some of the deals offered are highly unusual. Some renters say they are asked to spend only a few fortunes on furniture and appliances to sign a lease. This scenario is highly unusual since rent in Berlin increased to 42% in 5 years alone compared to Munich and Frankfurt.
However, it proves that the real estate industry in Germany is doing different ways just to sell houses or spaces.
For this reason, there are low vacancies for office, logistics, residential properties, which encouraged investors to be optimistic even in the midst of crisis. In fact, Berlin has taken the number one spot as the overall real estate prospect due to the stability of the office market and the increasing potential of rents. Other major cities of Germany, Frankfurt, Munich and Hamburg, are cemented in the top 10.
On the other hand, Amsterdam steals the 5th spot as a real estate prospect for investors. However, one problem is currently at play – the price hike in housing prices. This statement is supported by ABN Amro, where they predicted that the Netherlands would increase its housing prices by 12.5 percent in 2022 and another 5 percent increase in 2023. The experts from Abn Amro also expect that the prices will grow faster in the largest Dutch cities, namely, Amsterdam, Rotterdam, Utrecht and The Hague.
The low-interest rates are partially responsible for the increase in prices on mortgages. After all, the rise in prices will generate more profit for the real estate industry because the rates are on the lower end. The senior economist Philip Bokeloh stated that the mortgage interest rates would remain low even after the decline due to spike in inflation.
While the prices are spiking, the wages in the Netherlands remain positive due to the economic recovery and tight labour market, especially when the lockdown protocols are reversed. Since more people have a stable income, they can still afford to buy houses or spaces despite the price hike.
The two countries – Germany and the Netherlands, have their short-term concerns due to the crisis. However, investors are optimistic about the investment opportunities in these countries this 2022. The price increase in housing for the Netherlands and the sound economy of Germany are evident enough to generate liquidity and stability. Therefore, they will stay attractive to potential investors.
Aroundtown’s office building is now fully occupied near Frankfurt, Neu-Isenburg
Another evidence that the real estate industry in Europe is recovering is due to another deal closed by Aroundtown with the company Adapter GmbH. The company is the new tenant of Aroundtown’s office building in Neu-Isenburg, next to Frankfurt. The rented space is said to have two floors with a space of about 2,000 sqm. The lease agreement lasts up to 8 years of full occupancy.
The office building is situated in the southern part of Frankfurt, Neu-Isenberg, along with Frankfurt’s centre and the airport. These areas are part of TLG Immobilien AG, a subsidiary of Aroundtown the third’s largest real estate company in Europe.
Aroundtown’s success in this pandemic is attributed to its management team which is very experienced and motivated. Avisco (a company controlled by Yakir Gabay), currently holds over 10% of Aroundtown. Blackrock and many other of the largest international institutional investors are the remaining shareholders and bondholders in Aroundtown.
