Insights from Expo Real 2023
Tomasz Wozniak 
November 6, 2023
Tomasz Wozniak
November 6, 2023 Right after Oktoberfest, on October 4th – 6th 2023, real estate professionals from across the globe met in Munich, Germany for another edition of Expo Real – Europe’s most important real estate fair.
This year the event attracted over 40,000 participants and over 1,800 exhibitors.
Expo Real 2023 has provided a unique platform for real estate professionals to discuss the state of the real estate market in 2023 as well as predictions for 2024 (and beyond) – read some of the key takeaways below.
Hotel assets were by far one of the most talked about asset classes of the event. Participants in the market are facing a variety of challenges – two key ones being decreased level of transactions and limited availability of large, institutional capital which historically has been used to finance major parts of hospitality transactions. These challenges however present opportunities to alternative lenders, which are able to execute transactions in a timely manner and can take additional risk that some larger institutions have currently no appetite for.
Ground up development projects across asset classes are slowing down due to increased interest rates and construction cost. That is leading to value-add transactions getting more traction and popularity within the industry. Particularly, we are seeing conversation projects and acquisition of existing and outdated assets.
Investors are broadening their investment horizons by considering new asset classes and new geographies. For example, we have seen a number of investors historically focused on Western Europe now expanding to Central and Eastern Europe – all in search of attractive opportunities in markets with strong fundamentals.
Economic conditions are far from ideal. However, the general consensus is that we are not heading into another real estate crisis. There is sufficient liquidity in the capital markets albeit it is more difficult to access. Inflation is no longer increasing which hopefully will put less pressure on Central Banks to continue increasing interest rates (at the time of writing ECB has just announced that after 10 consecutive interest rate hikes the interest rate will remain at the same level).
One of the main risks in the coming years concerns refinancing of senior debt facilities – interest rates offered on the market today far exceed fixed rates that property landlords were able to secure between 2018 – 2023. Combining that with the high degree of leverage that was offered across Europe may lead to borrowers having to introduce fresh capital into their real estate portfolios.
Overall, the general consensus from the Expo Real 2023 was that the real estate market is, and will remain for a foreseeable future, a challenging one. However this is usually when superior investment opportunities appear. This environment will especially favor investors that have access to liquidity (either via pure cash or via access to relatively cheap borrowing).
We are working with clients that are already gearing up for opportunities that will come to the market in the next two years. Get in touch now to discuss your requirements and we will be delighted to support further.