Stefan Haas manages Munich Re's billion-dollar real estate portfolio. He expects things to be difficult in 2027. Nevertheless, he sees opportunities and believes in Germany as a location.
Munich. Complaining is almost part of folklore in the real estate industry. But this fall, one or two concerns actually seem to be justified. When builders and investors had just gotten used to higher interest rates, they rose again. Accordingly, reports of failed sales dominated discussions at the annual industry meeting Expo Real.
Meag boss Stefan Haas, on the other hand, is less pessimistic about the future. At Munich Re's investment company, he is responsible for a real estate portfolio worth billions and reveals why the current market phase is also full of opportunities.
In the Handelsblatt Invest podcast, he gives insights into what he is buying now and why he thinks Germany is an interesting location. When it comes to interest rates, the qualified civil engineer has a very clear opinion - and also about who should be active in the real estate market and who shouldn't.
Mr. Haas, do you feel like the little boy in the candy store because there are so many cheap properties on the market now?
That would be nice, but for us we tend to look for Lindt chocolate. And of course it is in great demand.
Who is competing with you?
These are particularly family offices that also take advantage of this attractive market phase. But I agree with you, we have a relatively good selection of products at significantly reduced prices compared to 2022. But we also have to take into account the increased interest rates.
We'll come back to interest rates in a moment, but what's currently on your shopping list?
We are classic core investors.
This means you buy buildings in prime locations in cities where square meters are in high demand.
Exactly. And here we are looking for offices, apartments, retail parks, but also logistics properties. Especially in Germany and Western Europe.
Germany is currently being talked badly about. But you belong to the camp of those who say that Germany is still attractive.
We were the sick man of Europe before, but we picked ourselves up again. I believe our position and economic strength in the EU is large enough to be a very interesting investment location.
There are also a lot of property owners in this country who have come under pressure and have to sell their properties. What's coming onto the market right now? To stay with the picture: branded chocolate or rather own brands from the discounter?
Certainly both. I think what comes onto the market also depends on how high the transaction security needs to be.
That means?
If you really want to get a deal done this year, you need to come to market with a top product. Because the discounter goods are currently left in the store. We are also trying to sell some things and have been successful, but we have a clear buyer's market. This means that you are either prepared to make concessions on price or you are stuck.
But are they more in the buyer’s camp?
Yes, but we regularly adjust our portfolio with targeted sales.
How should I imagine such a sales process?
We initiate a market test to verify the willingness and price of potential buyers. If the bid situation is not sufficient, we will withdraw the offer. If we find buyers on the market who want this product at this location, the deal is made.
Stefan Haas is responsible for real estate on the Meag board. He studied civil engineering in Karlsruhe and completed his studies in Wuppertal with a doctorate. After working at Hypovereinsbank/Unicredit Group, Haas joined Meag in 2006.
Munich Ergo Asset-Management GmbH, Meag for short, manages the assets of the DAX group Munich Re and at the same time works with institutional investors. In addition to securities, the company also traditionally invests in companies. In total, Meag manages real estate worth over 15 billion euros, primarily in Germany and the rest of Europe.
What is currently not selling on the market?
Among other things, offices in secondary locations. They cannot currently be sold at attractive prices.
Do you expect such locations to be in demand again, or will this segment remain unattractive?
We will not see the prices we saw before the interest rate turnaround again. Nevertheless, we hope for a certain calming of the market and more interest in real estate in the coming years.
Where should this interest come from?
Market participants are adapting to the new situation with their price expectations. When interest rates rise, this means that potential sellers are willing to make concessions and then supply and demand can be more easily matched again.
At the Expo Real real estate trade fair, the tone of most visitors and exhibitors was rather reserved. So does that mean this year will be difficult?
I'll go a little further. It will also be a difficult year next year. Regardless of this, real estate is an important part of every institutional investor's portfolio, and demand will also increase again. But it's difficult at the moment.
Your interest rate outlook sounds rather pessimistic. In long-term comparison, the interest rates are rather low.
That's right. We are spoiled by a very long period of low interest rates. Some forecasts assume that interest rates will fall slightly again next year. The geopolitical situation is crucial. When energy markets relax, inflationary pressure eases. The expectation would then be that interest rates would fall again.
There are economists who expect that real estate will become more interesting again if confidence in bonds declines more. What do you think of this theory?
I can well imagine that material assets will soon be in greater demand again. But I also believe that we will have completely different problems if trust in German or American government bonds, for example, dwindles. If inflation plays a larger role again, inflation-indexed rents offer protection. The argument of inflation protection also has a positive effect on the real estate asset class.
You already mentioned it: We are coming from a time of extremely low interest rates. Was this special situation more of a curse or a blessing for the industry?
This phase was historically unique. I believe that many have come to the market lacking professionalism. Because it was a no-brainer that the property was worth more year after year. After the interest rate turnaround, a market shakeout began, which is still ongoing, but has already largely taken place. And I believe that we will definitely not see this extreme boom phase again in this form in the next few years - both in terms of real estate prices and demand, but also in employment figures and salaries.
Where are we currently? Are we behind us from the worst or is there still something threatening us?
I think we've seen the bottom, or at least we're very close to it. And we also notice that no matter what bad news comes from the left or right, the buyer doesn't back off. What matters is that the product is good and the price is right. Then you pay too. This means that prices are unlikely to fall significantly, especially for core products.
Does the real estate industry need support from politicians?
I think the state first has to solve many issues for itself. Just think of the construction turbo, to give an example. If the general conditions are right, investors will come on their own. This means: The state should do its homework; after all, we do it too.
