FiveRocks Development SE
Investors take refuge in physical assets
Turbulent and non-transparent stock markets, Wirecard scandal, trade wars, Corona crisis, etc. tend to have a positive effect on real estate prices - especially in peripheral locations of metropolitan regions.
The current Covid-19 crisis has unsettled many #investors and temporarily led to strong distortions on the #stock markets. Although these have largely recovered after the initial shock and uncertainties with the first lifting of the quarantine and travel restrictions, the question remains as to what will happen now after the crisis. In this regard, numerous institutes and economic experts have now published initial studies and analyses almost 4 months after the start of the crisis. The conclusion is that the outlook for the #real estate industry, compared to other industries, is quite positive. Overall, the inflow of capital into the #real estate market, which is considered comparatively safe, and into #property assets in general has increased. According to some studies, the #housing market in particular could even emerge as a beneficiary of the crisis.
In its report, the Cologne Institute for Economic Research (IW Köln), for example, points to a veritable flight into hard tangible assets, such as real estate. Whereas central city locations have seen enormous price increases in recent years, suburban locations in particular could experience a boom in the coming years. Due to the experiences of many people during the quarantine and the rapidly advancing establishment of #HomeOffice workplaces, the demand for larger apartments in these peripheral locations in particular could increase. Here we see ourselves well positioned with the project in #Willich, with excellent connections to #Düsseldorf. A recent report by the research company F+B, which publishes data and analyses on current real estate prices in particular, shows that current prices are now already above the pre-crisis level, following a short-term decline. Also the Federal Association of German Credit Unions (BVR) announces in a current forecast a price increase of #owner-occupied apartments of just under 5% in 2020 in Germany - Corona notwithstanding. According to the Federal Statistical Office, at least in the 1st quarter of 2020 alone, prices for apartments across Germany have risen by over 3%.
Our collective impressions from recent conversations with professional market participants and brokers are basically in line with these expert assessments. Demand for housing remains high in areas close to cities due to the lack of supply. A certain catch-up effect from the past few months will also come into play here in the foreseeable future. In addition, working from home for several weeks at a time could continue to spur demand for more spacious and pleasant living space, with the possibility of home office facilities.
With the upcoming projects, we plan to participate in these quite positive trends and make our contribution to satisfying the ongoing demand with innovative and market-driven #housing.