Exchanging News and Views at Expo Real

MHN reports from the Expo Real 2012 International Trade Fair for Commercial Property and Investment, held at Messe München International in Munich, Germany.

Munich, Germany—The financial and debt crisis has been felt all over the world, but no one can deny that some of the most hard-struck countries have been in Europe. With Italy playing a chicken game against Spain and signaling that they are not willing to make an early request for intervention via Eurozone bailout funds, at least not before Spain, one might have expected a lower turnout at the Expo Real 2012 International Trade Fair for Commercial Property and Investment, held at Messe München International in Munich, Germany. But that was not the case—over 1,700 exhibitors from 31 countries have spread out across 64,000 square meters at the 15th edition of the event. Eugen Egetenmeier, Messe Munchen’s managing director, said: “In light of the financial and debt crisis in Europe and the resulting challenges and market changes facing the real estate sector, companies are using Expo Real to exchange news and views and network.”

Messe München International features over 180,000 square meters (around 1.9 million square feet) of exhibition space divided in 16 ultra-modern, column free exhibition halls and approximately 3.9 million square feet of outdoor space. The exhibition grounds are also the only ones in the world to have been awarded the “Energy efficient company” certificate by TÜV SÜD.

Apart from the company stalls where you can find major players such as Cushman & Wakefield, CBRE and BNP Paribas, across the three days at Expo Real the visitors will be able to attend various forums and participate in debates on various topics of interest such as Real Estate in Germany, Demographics, Development, Financing and Investment. An array of speakers will be present including Sergey E. Cheryomin, minister of Moscow City Government, talking about the territorial expansion of the City of Moscow, and Dr. Peter Ramsauer, German federal minister for transport, building and urban Development, offering a keynote speech on the subject: “Development of metropolitan area: The part investors can play.” Amongst the numerous projects presented at the trade fair, a couple of megaprojects in Urban Development have stood out: The New Moscow, Belval and Le Grande Paris.

At Expo Real 2012, there will also be a couple of awards. The first one is the John Jacob Astor Competition prize, which will go to the most extraordinary contemporary commercial real estate project. The second is the Prime Property Award 2012, recognizing leadership in sustainability, the winner being revealed within the 3rd Sustainable Investment Conference held at Expo Real and hosted by Union Investment, but more on that in our next articles.

At the inaugural press conference moderated by Katrin Polenz, trade fair PR manager, Expo Real 2012; Eugen Egetenmeier, Messe Munchen’s managing director; and Dr. Jan Amrit Poser, chief economist and head of research at Bank Sarasin & Cie AG, engaged in two presentations highlighting the main events of the trade fair and analyzing the economic background and trends.

Eugen Egetenmeier highlighted the main tendencies at Expo Real 2012, such as the increased interest in residential real estate expressed by institutional investors, which are also more involved on the topic of financing, consolidation of the bank sector and this way offering more alternative financing solutions.

Dr. Jan Amrit Poser presented an analysis of the real estate market in the context of the global upturn. According to the IMF World Economic Outlook current account data 2007, the United States was the largest capital importer with 49.2 percent, followed by Spain with 9.8 percent and the United Kingdom with 8 percent. On the other hand, China was the largest capital exporter with 21.3 percent, followed by Germany with 14.5 percent and Japan with 12.1 percent.

The current account balances are driving the extension of credit and implicitly the real estate markets. Capital flows must change direction and the real estate market trends need to reverse. The real estate market in surplus countries is lagging behind. When comparing the change in real estate prices between 1999-2007 and the change in current accounts balance in the same period, countries such as Japan and Germany, which had positive current account balances, recorded no change in the real estate prices. On the opposite side, countries such as the United States, Spain, Ireland and Italy, had drastic increases in real estate prices while the current account balances were negative.

In conclusion Jan Amrit Poser compared the over/undervaluation versus rent/income to the real estate price change and identified the hotspots and opportunities in the international real estate markets. The two countries identified as being at turning points are Japan and the United States. Japan is at a turning point as it has an under-valuated real estate market with a negative real estate price change compared with the year before, and with the decreasing real estate prices the United States has reached a more realistic position that needs to be backed by a positive change in account balances to re-launch the real estate market. Markets such as France, New Zealand and the United Kingdom are in the bubble alert zone as real estate price have increased but the market is currently over-valuated. As would be expected, Spain and Italy are in the crash zone with real estate prices in decline and with an over-valuated market.

Expo Real ultimately is the perfect medium for networking, for developers and architects to showcase their plans and for investors and financiers to showcase their support mechanisms. Ultimately the real estate market can only benefit from such events.