A cautiously positive mood at Expo Real

A beautiful blue sky on Sunday morning clearly boosted my mood and after breakfast at home I was ready to kick-start preparations for this year’s Expo Real. My private wireless LAN worked surprisingly well (mostly, it does not) and the Lufthansa check-in page came up smoothly. That’s where my frustration started. Late Sunday morning was undeniably too late – all that remained was a middle seat in the flight to Munich. Next, I checked the weather forecast– rain and cool temperatures, instead of the warm and sunny days you normally can count on during Expo!  Nevertheless, after a crowed early Monday morning flight (seat B15!), we were greeted with the usual sunshine in Munich. This changed for the following two days, when cool and rainy weather meant attendees remained inside the exhibition halls with crowds moving in the corridors at snail’s pace and noise levels making any conversation a challenge.

Despite crowded halls, international attendance appeared to be weaker than in recent years, as delegates from the harder-hit Eurozone economies were mostly absent. Still, the general mood can be best reflected as “cautiously positive” with most attendees supporting the view that market fundamentals are still in a good shape and opportunities remain plentiful – although significant challenges persist. “Core” and “prime” were – unsurprisingly – the most used words.

Attendees normally come to Expo Real for networking, while interest in panel sessions and round tables has been rather limited in past years. This year however, there was another word that saw an unusual high number of attendees drawn to various conference panels: Change.

Kicking off a series of sessions about demographic change was Germany’s Federal Minister of Transport, Building and Urban Development, Dr. Peter Ramsauer. Unsurprisingly, he gave a rather political speech (in other words not providing real insight into the topic, let alone any conclusions).His presence nevertheless highlighted the rising awareness that effective collaboration between governments, local authorities and the real estate sector will be vital to successfully tackle the challenges of a changing environment.

Particularly strong emphasis was given to the evolving retail and logistics sectors. Panellists agreed that the future of retail will be multi-channel with growth in e-commerce remaining the main global theme for the coming years. High street shops and shopping centres are set to change in design and functionality, and retail brands must take demographic diversity and multi-culturalism more seriously. Ultimately, this will require a change in distribution networks, boosting activity in logistics real estate market. Panellists saw the potential in the logistics asset class – still in its infancy (is this true?)  – With strong fundamentals and the prospect of growth over the next decade

Last but not least, while investors in an uncertain environment have kept their focus on mature, liquid real estate markets, a frequently asked question was: where are the emerging markets? Russia made the race in panellist’s opinions – no surprise. I personally thought that Turkey was not given enough credit as an upcoming investment location, especially as all panellists agreed it has strong fundamentals, particularly in the thriving retail and distribution markets.

No doubt we will all be back in Munich this time next year. It will be interesting to see how predictions have worked out and compare thoughts about emerging locations again. Over a glass of beer and a pretzel, of course.