Real Estate Investments 2019: New Market Dynamics

Rising inflation and dynamic market conditions keep the investment market in motion. Thus, the necessity for adjustment opens up new possibilities.

The real estate market is constantly changing – which also leads to new living concepts. (Image: Pexels.com)

In an article by the trade journal DAS INVESTMENT, trends of the German real estate market are being discussed. In the year 2019, this is facing new challenges and chances, which resulted from both demographic, as well as economic change.

Even if rents of many asset classes in the previous year stayed around a low level and scattered share valuations experienced strong declines, noteworthy effects on the real estate market were absent. Just at the end of 2018, a lot has been invested into this asset class. Still, investors will have to adjust to some novelties: The structural change of the job market noticeably affects the real estate market.

Because with flatter hierarchies, more flexible working conditions and improved mobility, new living concepts emerge as well. Micro apartments with co-working spaces, like the ones Red Rock Group is currently developing in Leipzig, are going to be attractive especially for young, single specialists. Locations of the booming e-commerce and logistics market are contributing to that, since huge numbers of jobs are accompanied by an increased demand for housings. In general, the real estate sector will have to adjust to the emerging social needs and develop itself through that. The growing number of older people for instance increased demand for assisted and barrier-free living. Here, proper project developments are in demand.

The experts however are certain that the real estate market is able to take a stand in the ongoing change – also in relation to economic shifts. At this, the inflation in the euro zone is a significant indicator. In annual comparison it is currently at 1.4 percent, after the recorded 1.6 percent in December. The fact that this rate will increase further, seems very likely however: “Due to the booming job markets in many places, many analysts expect a dynamic turn of the wage-price spiral and therefore an upward movement of the inflation. In turn, this could lead to an increase of the indexed rental rates – which generally will positively affect the performance of the asset class real estate”, say the experts.

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