German real estate, Arab potential

The leading real estate fair in Germany and the second biggest event in Europe after Mipim in Cannes occured last week in Munich, and 1279 exhibitors from 31 countries participated.

In spite of Germanys rather weak economic performance, the fair is growing and doing well and attracted 16,000 real estate experts as visitors from 63 countries. Actually the fair has become the best place to meet and network in Germany for the industry.

Main topics have been so far investments in hotels, public-private partnership, crossborder transactions between European Union and eastern Europe as well as trends in far east and USA.
Another discussion point was the difficulties to find tenants for many real estate objects currently.

The situation in Germany will finally recover in the next 12 - 18 months as the bottle neck of credits is solved via asset backed securities supported of the state-owned bank KfW.

German banks have faced a substantial equity gap which limited the supply of fresh money to the market leading to a stagnating total credit volume. Now the banks can strip off their assets, securitize them and serve the economy again with fresh money.

As biggest economy in Europe Germany still has a lot of opportunities to be discovered which are - typically for recession periods - reasonable prized. The experience with Arab investors is not widespread.

Ask leading banks for a sharia compliant leverage and only some of them know what it means and are able to do so. Opposed to that point most of the large real estate companies are strongly interested to work more closely with Arab counterparts.

While China was a big issue this year the Arab world is in both directions highly under represented. In the USA German and Arab investors are the biggest in the market; however between them there is much room for closer cooperation and fruitful business.